Having some sort of budget can allow you to make better financial decisions. Typically, budgets work best for people who have a fixed income and know how much their income is every month. Budgeting is just as important for a freelancer who may have a varied amount of income each month. There is a simple way that a freelancer can budget.
Just like any budget, it’s important to figure out your monthly expenses on your necessities in life like rent/mortgage, bills, transportation, food, and so on. It’s important to know this number to ensure you make enough each month to cover these basic needs. Ideally, if you freelance you have a 3-6 month emergency fund to cover these things.
For everything else in your budget, like dining out, clothes, coffee, and so on, you’ll want to write down the percentage these areas should be. You may say you want your dining budget to be 5% of your monthly income, groceries at %15, and entertainment at 10% of your income. For dining out, some months that 5% will allow you to go out to eat more and other months you may not be able to eat out much. This gives you the flexibility to budget even though you don’t know your exact income each month. Having a general idea of how much of a percent you want to spend will give you the benefits of a budget.
Having an emergency fund will allow you to ensure you have enough money for your day-to-day life, but budgeting in percentages for the rest of your budget will let you have money every month for these other things. If your income is lower one month then that total amount will be less, but this ensures that you are sticking to your budget.