Freelance Writers: Setting a Budget
Budgeting: it’s not a dirty word. In fact, it can be empowering for a freelance content writer. Instead of worrying about making ends meet when a client pays later than you were expecting, you have the means to pay all your bills on time and may have a bit left over for the fun things in life. The math for creating a budget may be a little more involved when you work as a freelancer. You most likely do not receive a steady paycheck and have to estimate your monthly income based on past experience.
Getting the Average
Look at the amounts you earned over the past three or six months. For example, in the first month, you may have earned $1,000. In the second, you earned $4,000 and in the third, you earned $3,000. Add those amounts together, then divide by the number of months. In the example, your average monthly income is about $2,667.
If you prefer to play it extra safe, use the month with the least amount earned as your average for your budget. For example, if in your lowest month you earned $1,000, set that as your monthly income. Strive to earn more than that each month, though.
Figuring Out Expenses
Create a list of your monthly expenses — from the mandatory ones like mortgage or rent, to the “fun” stuff like movies, restaurants or DVDs. Add up the expenses and note any shortfall. You’ll have to start trimming if the expenses are more than your average or lowest monthly income, which is why you need to list all of them in the first place. Don’t forget to figure in taxes, including local business taxes and self-employment tax.
Don’t Let the Money Burn a Hole In Your Pocket
If you regularly write for content services, you are probably used to getting paid consistently, so your income may not fluctuate from month to month. If you write for other clients who pay less regularly, you may find yourself with considerable sums of extra cash during a given month. It’s tempting to spend that money like there is no tomorrow, but you need to remember that there is a tomorrow. And that tomorrow may not have any money if you spend it all on a designer outfit or at a fancy restaurant.
Create a savings account specifically for those months when you earn more than you anticipated. The money will earn a bit of interest, which is always good. It will also be easy for you to access during those months when your income isn’t as high you expected. Make a savings account for the lean times, as well as another account to help you deal with the unexpected in life, such as a dental crown or a car repair. In your regular monthly budget, set aside 10 to 20 percent of your income for the second savings account.
Making a budget protects your finances and helps you avoid debt. It can also help you keep your wits as you work through life as a freelance content writer.
Amy F is a freelance writer available on WriterAccess, a marketplace where clients and expert writers connect for assignments.