I have been freelancing since the beginning of March and things (knock on wood) have begun to settle into a nice tempo. I have a core group of four clients and am in the process of looking for one more. I’m also working on some projects that I’ll tell you about later!
One of the biggest habits that I’ve had to master was monthly budgeting on a variable income. Fortunately, I have a pretty good idea of what I will be earning but payments for a couple of my clients run about 3-4 days late. When I was working at my old job I was paid once a month and took care of all my monthly expenses at that time.
Things Change
Now I am getting payments almost every week. While this is great-my very robust savings that I had in December had dwindled to the point where I was…a little (a lot) concerned! So, I had to accumulate funds in order to pay on what needed to be taken care of. Another issue was that I had switched to a cash only budget so I couldn’t charge to pay my bills.
Fortunately, I spent the past year or so killing my all of my bad habits.
- Shopping-I still enjoy it, but I don’t need to shop because I have what I need and I want to use what I have. So, I think I’ve only purchased two cocktail dresses from Magical Goodwill for $6 (great deal!) I also don’t shop when I’m bored anymore.
- Groceries-I shop only once a week and I rock my pantry. I just eat what’s in my home and then think creatively if groceries get low towards the end of the week-which they typically don’t.
Budgeting Strategy Variable Income (and June)
- Project My Next Month’s Income-I normally sit down in the middle of the month to look at my project expenses and income for the upcoming month.
- Double Pay-I am now paying my mortgage and student loans twice this month. My goal is to be at least 2-3 months ahead on those recurring expenses.
- Weekly Cash-I am now on a cash only budget. It’s working really, really well. In fact, I absolutely love it! Did you see my hack from last week so that I don’t have to carry envelopes everywhere? I just withdraw cash at the beginning of the week and divide into the different spending categories that I’ve noted in my budget. I am 100% sure that being on a cash budget has made a huge difference in my ability to better manage my budget.
- Replenish Savings-Ironically, I have more saved at this point time then I have in a long time. I’m working really hard to increase my savings and think I should be where I would like to be in about 6 weeks.
- Increase my payments-I am paying extra on my monthly expenses (electric/internet/home insurance) This is a longstanding habit and like doing this because you end up with a credit on your account.
One very important point I would like to make is that there are a couple of months that are notoriously slow for freelancing. From my observations those months are: August, December, and January. So, my goal is to work as hard as I can in the other months where work seems to be most abundant. I’m also working a number of Brand Ambassador gigs that are a lot of fun and pay fairly well.
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Great plan! And that’s awesome that you’re double paying on utility bills and debt payments. It feels great to get ahead.
I was doing that before and it made a big difference in how I felt about everything. The only issue is that sometimes I would be so much ahead that I would get confused about what was going on LOL!
Yeah it definitely adds and extra challenge to the budget. In fact I’ve yet to really nail it after all these years, but hope that I make more than projected…then things to go along swimmingly. 🙂
Now that I have a better idea of what is going on I am able to be proactive instead of reactive which is huge. And, YES, I always want to make more money than projected LOL!
I love the idea of paying ahead in utilities! We will use that in the coming months!
You can prepay almost anything without a penalty. I think of it as part of my emergency savings-similar to my pantry stockpile and food stockpile.
Congrats on finally controlling yourself to shop when you’re bored. This is what I dealt with years ago that whenever I was bored, I shopped, which made me spend unexpected amount of money. Glad that we overcame this.
Boredom was a huge problem! We are rocking our money sucking habits.