Are you a freelancer? Then you have a number of things that give you challenges. For instance, irregular income means you cannot be able to plan adequately for some expenses or make a regular saving. Besides, your tax liabilities may pose a significant challenge to you. Maybe you are used to the deduction from the source approach, now that you are no longer employed, it is up to compute your tax liability and submit payments in good time. Lack of a retirement account may be a challenge as well, not to talk of ineligibility to get group insurance. Maybe you are plagued with the inability to make enough money that can really sustain you currently and in the future.
You do not need to face a disastrous condition in order to be inspired to always be on top of your finances. Being a freelancer you know just how important it is to deliver right on time. This is how important also it to be fiscally prudent. If you do not budget for your finances well, you will be stressed with payments, taking too much time thinking of your financial problems instead of your work. Since you do not receive a steady paycheck, it is only important that you plan for your irregular income. Otherwise you may consider loan options. To avoid frustrations that come with poor money management we are going to discuss how you can run your budget at home as a freelancer. Follow the tips discussed here and attain peace of mind, a healthy status we all need.
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• Understand what you are spending
Spend less than what you earn has proven to be the wisest financial advice for not only freelancers but anyone who wishes to be healthy financially and even attain financial independence. If you want to budget effectively, you must know where your finances go. The basic way and simplest way is to take a notebook and sit down. Try your level best to come up with the average value of your expenditures. It can be easier also if you use software, but if you cannot access one, sum up your frequent expenses. It could housing, groceries, and transportation among others. Then, establish the value of your average spending by means of your log of expenditures, credit card statements or other ways. Weight the figure obtained against your income.
Can your income meet all that? After covering these costs you should at least be left something to save for emergencies. If you are expenses are more than your income, then you need to get back to the drawing board. You need to cut your expenses as much as you can. Only spend on what you practically need until you establish a sufficient figure of disposable income. The basic idea is that you should always less money than what you bring in every month. If you cannot do this, then think of ways of earning more money, and budgeting is an option still.
How can you manage these situations? Sometimes borrowing online from a reputable money lender like Instant Loan can help. Many people face these challenges because they are just so lazy when it comes to planning their expenditures. In many cases, a disastrous event has served as a wakeup call for such individuals.
• Draft a baseline budget
Take note of your income for a few consecutive months and establish your average. For instance, if you earned $1900, $4,100 and then $3,200, you can set a budget of $2600, not forgetting that at least 30% of this amount will be taxed. If you have some gigs that cover that amount, you can devote them specifically for that and save the rest you will earn from other gigs. For instance, if perhaps 50% of the money you earn is regular, use that to budget and save the rest. You can still use part of the extra debt to settle debts if you have any.
• Establish a dream budget
The purpose of the two aforementioned strategies is to help you not live beyond your means. But if you are a new freelancer or recently you have lost some clients, it may look impossible or impractical to you. If this is the case, then sum up your frequent expenses and the amount you would like to save, perhaps 20%, and what to incur on vacation. If taxes take 30% and save another 20%, then you will have to spend 50% of your earnings. Because of these calculations, you may feel it is necessary to increases the fee you charge for your services or increase working hours.
Make sure you set a rate that reflects the time you take and all the efforts you put into your offers. If what you get here surpass what you had then set this as your baseline budget, then make this level of earnings your target every month, only raise your rates when the demand is high or when you have a number of regular clients. Suppose the dream budget very high compared to what you had earlier, consider cutting costs. You will be effective in this regard if you start with the most regular expenses such as groceries and set a weekly target. Track your development and keep improving.
• Attempt the 50/20/30 approach to budgeting
If it becomes so difficult to decide how you should spend on various things, use the strategy. The first step is to lessen your tax obligation from what you earn. Afterward, you can divide your expenses into three. The first category should involve necessities such as groceries, transportation costs, housing, and other basic utilities. The second category consists of savings and repayment of debts. The final category is for your discretionary expenditure on such things as going out, entertainment t and shopping among others. Thereafter, apportion 50% of your earnings to necessities, at least 20% to savings and less than 30% on discretionary expenditures. The focus here is to maximize savings and repayment of debts.
• Figure out when often get paid
Clients always pay at different times. It could be on a weekly basis, or after two weeks. However, it is possible to determine the dates you are likely to receive much of your earnings. Know these dates and plan your expenditures on this basis. By so doing you will be more organized.
Conclusion
People budget differently. But if you really need to get the best out your earnings, follow these tips. You will be very organized and even move towards financial independence. We will appreciate if you give us your thoughts. Thank you.
