Making your own way in the world is admirable, but can sometimes bring with it some less than welcome realities. Sure, you've left the drudgery of your office, a realm so boring it was practically dangerous, but that brings the necessity of budgeting into light.
There are pros and cons to this, of course. Steady, reliable monthly pay is why so many people stick to conventional employment, after all, but now you've taken the plunge, it's best to get on top of your finances before you're reaching for the ramen just a little too often. Let's explore why budgeting should be hand in hand with your freelancing philosophy.
There'll be peaks and troughs
The obvious perspective should be handled first, and that's simply that in the freelancing game, there'll be times when you're giving only a few hours of your week to certain projects, and times when you're swamped with work. Naturally, the latter tends to pay better, unless you're a supremely savvy fee haggler.
As such, wherever possible, it's best to prepare for the quieter times in advance. Leaning on those larger projects to build up a nest egg will give you the chance to coast out the less active periods in comfort. This is often easier said than done, but shouldn't be too much of a problem if you're able to put together a compelling portfolio that wins you contracts.
Balance your payment cycles
One thing far too few people tell you about going freelance is that you're basically your own business entity. And like a business, it falls to you to manage the cashflow.
Of course, half that battle's won for you already if you find a way of welcoming clients with different payment cycles. Depending on what you're producing and how often they need it, you may find that some clients pay a lump sum per month, others reimburse you weekly, and so on. Others still have a 30-day period before they'll even begin processing new invoices, which is another element to look out for when discussing terms with a new client – it's manageable, but ought to be planned for.
A good way of getting the wheels in motion is having a regular client whose monthly payments go towards rent and other large expenses, while also maintaining a client who pays weekly, thereby giving you a low-effort budget plan. That weekly amount can tick you over between the monthly payouts – but depending on your client base, you can mix and match to find the timetables that best work for you.
Consider emergency expenditures
Should your computer fail, your printer play havoc or your stationery supplies run dry, you could be looking at some expenses that might prove unwelcome. Whether you opt to have money stashed via savings apps, in a business account or simply tucked away as a rainy day fund, it's important to be prepared for life's little plot twists.
Being ahead of the game this way means you can adapt to any situation swiftly, meaning you don't lose time or feel the stress of having to sort out technical hiccups.
Pay yourself a salary
If you're lucky enough to be taking in plenty or have just completed a well paid one-off assignment, consider working out a way to extract a salary for yourself from that. It leaves the remainder nicely untouched for the longer term while seeing you lead your day to day life with the same kind of consistent comfort you'd get from a regular job – all with the freedom of freelancing.
The salary can either be a percentage of the profits that you've made, or a set amount that assures you some freedom and comfort without frittering away the good stuff. Either way, make sure you're getting what you deserve.
Look at the longer term
Freelancing can be a wonderful opportunity to earn your living and make your way in the world. However, it's a good plan to consider how long you're intending to freelance altogether. Do you foresee yourself freelancing for the entirety of your career? Is freelancing something you're doing to supplement existing salaried positions, or in anticipating of entering the more mundane working world again eventually?
While life is full of surprises, set out some game plans for five years, ten years or even retirement – think about where this freelancing lifestyle is trying to take you, and by all means, dream big. The more you can put into your war chest for your later years, the better – you'll sidestep life's uncertainties and potentially be able to enjoy your twilight years in peace and comfort.
Freelancing may be liberating, but it comes with the responsibility of creating your own financial security. That doesn't need to be as daunting as you may think, however, and with the right approach, you can ensure that working ad-hoc doesn't come with an ad-hoc capability in meeting rent, lifestyle and food and drink needs.
Balance how and when you're paid, work out your living expenses accordingly, prepare for the quieter months and plan for your future intelligently, and you'll be one of the freelancing success stories others turn to when planning their own leap into the field.