At Home Tips for Budgeting for Freelancers
Before you groan at reading another budgeting for freelancers article, remember I’ll try to make this fun. Grab a cup of coffee or tea; order some Greek food. Now, as you wait for GrubHub to drop by, let's tackle the notion of you as a freelancer.
Beginning your career as a business owner doesn’t have to seem as scary as the sound of paying for yourself totally does. As long as you set a budget and stick to it, you can build your business.
So, how do you come up with your business’s roadmap? Follow these tips.
Budgeting For Freelancers: Top Tips
When you strike out on your own as a freelancer, try to do it part-time at first. If you can start your independent contracting business as a side gig, you can still rely on your career job for income. This lets you comfortably begin your business without sacrificing your current way of life. You avoid the stress of trying to pay your bills immediately on just what business you can drum up.
What happens if you can’t?
Never fear. You can still make it.
Maybe your company downsized. Maybe you got fired. Perhaps you just graduated from college and have yet to find a job.
1. Budget, Budget, Budget
Create a business budget. You will have a separate budget for your personal expenses, just as you hopefully already do now. Put your salary as the top-most budget line. Your salary should at least cover your personal bills and groceries to start. You can give yourself a raise whenever you like. This business budget should cover all the necessary expenses.
What counts as necessary when you start a freelance business?
Budget your salary first.
Work from home, so you do not need to spend money on an office.
You do need your computer or tablet. Use your existing one while you begin the business.
Budget for any subscription services you will require, such as Copyscape or a professional software that doesn’t offer a free version.
Budget for childcare if you have kids. Your kids couldn’t interrupt you when you worked in an office and you will need that to remain true while you freelance, so budget for a childcare service or daycare. If your area offers an afterschool program, enroll your kids in it. You won’t be productive with children present so make sure they are not around for the workday.
Make a budget line for office supplies, such as printer paper, sticky notes, pens, and pencils.
Create a budget line for at least 30 percent of your utilities at your home. When you do your taxes, you’ll get to count it as a portion of your rent or mortgage payment and utilities as a deduction, so go ahead and add it to your budget. The rest you pay out of your salary just as you have from your career position at your employer.
Devote 20 percent minimum of the total annual budget for emergencies. Each month, you pay into a savings account at least 20 percent of your freelance earnings. This emergency fund lets you save what you’ll need to handle the unexpected. Your goal amount is 20 percent of the total budget, and you get there by paying this account every month. Once you reach that level, you maintain it by replenishing any expenses from it.
Make a line for discretionary funds. This shouldn’t be much to start with since you shouldn’t spend until you earn. Budget enough to take a client out for coffee or a reasonable lunch.
Budget for gas if you must drive to meetings and appointments.
Budget for business insurance if you must host meetings at your home office. You need business liability coverage.
Budget for your health insurance if you don’t have a full-time job that provides it.
Budget for your business taxes.
If you lack budgeting savvy, refer to Katherine Davis’ Budgetry article on best budgeting methods for tips to organize your personal expenses that you can also use as a freelancer or business owner. Also, consider using the Kakeibo budgeting method I wrote about in an article for Budgetry to reduce your personal spending before you go full-time as a freelancer. I also recommend the budgeting tips offered in Forbes.
2. At-Home Tips For Budgeting For Freelancers
Research the best existing online platforms for finding work. I’ve read numerous pie-in-the-sky pitches for various “business coaches,” who will tell you for $99 or such how they successfully earned a six-figure income their first year of business. They very likely lie in the program they created, or they live in a massive, major city with tons of opportunities. First, don’t pay $99 for someone to supposedly share with their “tricks.” You can find plenty of free genuine articles authored by actual business people who did what you want to do that explain, step-by-step, how to make money.
I’ll save you some time. Depending on what area of work you choose, you can start with:
Toptal (engineering and computer coding),
Upwork (every service area, including law and telemarketing, journalism and accounting, virtual assistants, etc.)
Freelancer (every service area, including business consultants, journalists, computer coding, virtual assistants)
Textbroker (writers, SEO experts, editors)
Writer Access (writers, editors, consultants, SEO experts, translators)
Verblio (writers, journalists, SEO experts)
If you want to land temporary work or full-time remote work as an employee, that’s a whole different list.
3. Use Every Platform For Which You Qualify
Apply to every applicable online platform. I mean that. I live that.
You’ll probably struggle if you only work with one platform, but if you will willingly apply to each and work with each of the platforms, you can succeed quickly. Why? Something that every wealthy or highly successful business person, from Ted Turner to Elon Mask to Gary Vaynerchuk to Larry Kim, will tell you. You need multiple streams of income.
Here’s how it works. Every platform has its own specialty area. I picked up a book deal on Writer Access, tons of SEO clients on Textbroker and Verblio, regular blogs from Upwork. Oh, and Freelancer became my go-to place for hiring. The writer of both of my business’ business plans came from there, but the most amazing logo artist I found on Upwork along with two stupendous WordPress designers.
Each platform pays on a different schedule, so you can get paid from Textbroker twice per week, Verblio every Monday, Writer Access on-demand, Upwork on-demand once you have $200 in escrow, or every Wednesday once you have $100 in escrow. As long as you will willingly put in the effort and keep a few irons in the fire, so to speak, you can forge a nice income freelancing.
Budget Efficiently and Save Money. Only with the Tools. Get Access. Join Budgetry.
4. Set Your Schedule And Stick To It
Set your schedule. Yes, you still need to maintain a schedule. If you treat freelancing like a hobby, you’ll earn like it is a hobby. Treat it as a major business, like you are the next Ted Turner or Elon Musk, and you can earn a really nice income. If you think that freelancing means Starbucks every day with your buddies and sleeping in, you should keep your day job. You won’t be able to pay the bills that way.
You need to work during your most productive time. You need to know when you feel most alert and devote that prime time to work. If you do your best early in the morning, get the hell up every morning and get to it. If you do best at night, that’s when you work. Do not expect others to keep you company. They are each looking out for their own earnings, too. If you really need a work buddy, even a virtual one, find a person who works the same way you do and the same hours. You can Zoom with each other. Realize that you can’t spend your workday visiting or talking because you and they will lose money. If you don’t want to both end up homeless you work quietly and efficiently.
I’ll be as forthright as possible. You should probably work an eight-hour day, but I do not. I love my 12 to 14 hour days! I manage four careers though and run two businesses, so I am counseling you to not follow my lead on this one. Few people can maintain that kind of schedule. Realize that you’ll probably still need to work at least close to an 8 to 5 or 9 to 6 because your clients need to reach you when they need you – during the business day.
5. Set Your Salary
Set your salary. Yep, you pay yourself now. Better figure out what your new company pays you.
Hey, wait Carlie. I don’t know how to do that, you say.
It is simple math. If you just graduated or haven’t held a job in a bit, look up on bls.gov what the median income is for your career. What is the entry level and what is the maximum? Maybe you already have a job for an employer doing what you want to do. What you make now, you should make your goal to pay yourself. Regardless, you must make at least your bills plus 30 percent before you can go full-time.
Let’s say you want to make the income of $72,000 per year. Divide that figure by 12 to find your monthly salary. You’d need to earn $6,000 per month. Sounds like a lot, right? Divide the annual income by 52 weeks instead. You need to earn $1,384 and change per week. Let’s figure out a per-day amount, too. Working five days a week, you’ll need to earn $276.92, but on a seven-day-week work week, you’d only need to earn $197.26 per day.
When you start to build a successful income, factor in a raise for yourself. Use the bls.gov website to find out what people in your industry earned as a cost of living increase raise.
6. Write Your Business Plan
Yep, you need one. Freelancers have to plan their business out, too. How do you plan to market your freelance services? What public relations and advertising methods will you use? What do you consider your business goals? How will you achieve those? If you have never written a business plan, hiring someone from Upwork or Freelancer to write one can net you a well-researched, well-written plan for a reasonable cost.
The contractor will interview you to determine your goals and needs, then research and write the plan. These goals drive how you spend, so business plans top the list of important needs.
7. Get Started
The sooner you start working, the better your freelance business will perform. If you put in a lot of work, you could end up so in demand that you often have to turn away work. You might have to shut off your availability in sites like Verblio because you’re so swamped. This beautiful feeling should have you dancing in the streets.
8. Remain Grateful
At the beginning of every project, say thank you to your client. At the end of the project, say thank you. That might not sound like budgeting advice, but the business set often remarks that gratitude provides an internal uplift, and it lets each client feel appreciated.
When you let your client know in writing that you appreciate the opportunity to work with them, they’re more likely to return for future work.
Learn More at Goalry
Put these tried and true tips for budgeting for freelancers to work for you. They’ve worked well for me, and they can work for you, too. You can learn more about starting your own business and growing it at Goalry. When you register for a free member key at Goalry, you’ll gain access to numerous financial tools and blogs at Goalry, Budgetry, Taxry, Loanry, Cashry, and Insurry.