Budgeting for freelancers is very essential! The varying and unpredictable projects lead to an unguessable earning which makes the whole process difficult to manage. No doubt, your permanent clients can lead to a constant earning but even this is not guaranteed to earn regular or even the next project! That’s why budgeting for freelancers becomes a nerve-wracking challenge.
A smart budgeting gives you a direction for a whole month in terms of how to spend? where to spend? and when to spend? It not only schedule your financial activities but also indicates you to engage more clients and maintain your professionalism!
How to Manage your Budget as a Freelancer?
Whether you a full-time or part-time freelancer, the key to budgeting for freelancers is knowing the payment gateways, setting up investment priorities, and much more. So, here we are with 6 unique tips to help you manage your budget as a freelancer!
1) Know your Payment Schedule
Although it is difficult, however, your permanent clients could help you towards budgeting as a freelancer. You can’t hold on to the same client for a whole career. But you certainly can find a bunch of those who will pay you according to the plan. Finalize the payment plan with your clients so you don’t miss out the pending plans because someone couldn’t come on time as you expected.
When it comes to Fiverr, you can have more than one regular buyers. Thanks to Fiverr for having a strong payment process which doesn’t allow the buyers to delay or steal the seller’s payment. End of the day, one have a better chance of planning his/ her income frequencies to an extent.
2) Plan Expenses on the Basis of Average Income
It is better to plan your expenses on the basis of your average income. You can estimate it by calculating the income for the last year and then dividing it with 24.
Categorizing the expenses into constant and flexible is the right way to go! The constant expenses can be your house rent, tuition fee, fuel, your kids’ school fee and so on. Take a note on those expenses and keep them on top of your expenditure list.
Budgeting for freelancers is crucial as it enables you to be judicious about the right time to spend time. Looking at the previous year expenses, you will have a choice to skip them. Doing this, you will be able to cut down the unnecessary costs when the income goes thin on Fiverr.
3) Differentiate your Personal and Business Accounts
“Separating your business accounts from your personal accounts makes it easier to clearly track all income and expenses related to your business without any added guesswork.”Upwork
Economical budgeting for freelancers also includes the separation of personal and business costs. The baby step you should take for this cause is to create isolated bank accounts for your business and personal lives including the credit cards.
Keep separate documents or spreadsheets to manage both proceedings. Also, make the access to both of accounts different including passwords so you never leave the track.
4) Target your Financial Goals
If you want to cope with large purchases, for example, emergency situations, post-retirement expenditures, or savings. Then, you must fix your financial goals with the dedicated period of time. These goals can vary from short-term to long-term but are still very helpful. Set a goal and try to achieve that in an allotted span of time.
Aiding some budget apps like ClarityMoney and NerdWallet also help you to keep an eye on your expenses. These apps also suggest you about the expenses you can opt to escape way from and save an extra bit of money for future.
5) Realize your Financial Priorities
The 50/ 30/ 20 formula while budgeting for freelancers works extremely well. Make sure you divide your income into three major aspects. You should allocate 50% of your income to the constant and must-paid expenses.
For example, your house-rent, your kids’ tuition, and school fee fueling costs etc. Never forget to keep those expenses on top of the priority list and pay them as soon as you hold the income or salary.
Other needs like tourism, gym membership, and dressing etc. should stand 2nd on that list. It might be a good idea to spend a maximum of 30% out of your monthly income.
Finally, the remaining 20% goes to your savings. That’s the suggested budgeting for freelancers to set their financial priorities.
6) Limit your Self to a Salary!
Freelancing is about being your own boss! As a freelancer, you should limit yourself to a fixed amount as you get in monthly salary. Although an established freelancer can differ from this idea, it will help you recover your hard time while not getting orders.
The idea here is to fix a profit percentage or amount out of monthly earnings for your expenditures. Just like you get a certain amount of salary during employment. For example, you earned $1000 this week, and the rest of that month you remained un-earned. You can face financial hardship in case of deciding your plan on the basis of that ($1000) earning.
So, it advised to grant yourself just like a boss does to its employee. But, here you are the boss of your own.
Keep it Simple,
As mentioned earlier, budgeting for freelancers is not simply due to unpredictable sales, income, and clients. Getting more orders on Fiverr is not that hard as to maintain your sales percentage which leads to becoming a successful freelancer on Fiverr.
Don’t forget all of those steps are beneficial because the ultimate goal is to put money into your pocket. End of the day the key is to give your 100% as a professional. Do everything including SEO your gigs, promoting gigs, and different ideas to earn on Fiverr to drive most clients towards your profile. Keep things simple and enjoy the success!
Happy Selling!
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