There are lots of people in the world for whom budgeting is second-nature, who can quickly calculate how and how much they ought to be spending at any given time – people who easily keep to their financial goals, and never break a sweat.
This post is for the rest of us.
Budgeting is requisite for many freelancers. Without it, you can get into some serious trouble (especially if your income is prone to fluctuation).
That doesn’t mean we’re all, uh, great at it!
Like many freelancers, I have long struggled with the vague feeling that I should budget – but while I wasn’t prone to crazy shopping sprees or yacht-buying expeditions, I just wasn’t great at tracking my money.
In the last few years, I’ve gotten a little better… thanks to a few beginner tips.
This is not by any means a post containing complex financial advice. For that, look to a, well… financial advisor.
Instead, this is BASIC budget tips for very BASIC budgeters – like myself! Or, perhaps, like you!
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1. Keep it simple – like, really simple
First, make a list. Lists aren’t scary, right? No arithmetic here!
Write down all of your “must” expenses: rent, transportation, debt, food, toiletries.
Be HONEST with yourself: Don’t base your food budget exclusively around 99-cent cans of beans, unless you really, really like beans.
Try your best to build in a savings plan, if you can. Socking something away from each check really helps when your biggest client unexpectedly folds (it happens).
Then, write down any regular expenses you have in addition to the “musts” like subscriptions, bills, gym memberships, etc.
Take a second look at this list; if you’re looking to be more frugal, are there any expenses you can cut back on?
A nice thing to target is things that you don’t particularly enjoy: outdated cable packages, unused magazine subscriptions, cruddy cups of coffee for your commute.
If you don’t love it and there’s a cheaper alternative, consider axing it.
Then, write down your expected income – I realize this can be a bit tricky for us freelancers, but I like to use a base number as a “probable” amount and build from there.
The difference between your expenditures and your income is the amount you have to play with.
2. Build in some wiggle-room
I hated budgeting for a long time, I think, because I don’t particularly like most “must” rules.
WHO ARE YOU TO TELL ME WHAT TO DO, BUDGET? I MADE YOU, I CAN DESTROY YOUUUUU!!
I have skirted this reflexive defiance by building my budget in ranges.
For instance, I might budget between $100-$200 on restaurant meals per month (I live in New York City; it’s hard to resist eating out).
If I hit the bottom of my range, great! If I hit the top of it, I know I have to backpedal those expenses next month.
Try to create realistic goals for yourself – but give yourself a bit of wiggle-room in case of emergencies, unforeseen events, or (heck) a lazy night of Chinese food.
3. Use tech to keep track
My mother, bless her, keeps a carefully-calculated handwritten list of all expenditures. Her checkbook is always perfectly balanced, and she knows where her money is going at all times.
… I can’t even always tell you where my checkbook IS.
Fortunately, technology can help us budget-averse types keep track of our money. It’s easy to set up e-alerts and online reminders for bills (or even automatic payments, if you’d rather not think about it), and most banks allow you to monitor accounts online.
There are a number of free or reasonably-priced apps that help one to stick to a budget (and keep track of freelance expenses come tax season).
Mint is the one I use, and it works fine – full disclosure: I haven’t tried any of its competitors, because I am very lazy.
Technology can help budgeting feel less onerous, turning the balancing act into a bit of a game (and sometimes eliminating much of the unnecessary, uh, math).
But more importantly, it allows you to be flexible and clear-eyed about your moment-to-moment spending.
If you’ve tracked expenses for a month or two and see that you WAY exceed your budget in certain arenas (cough cough, Starbucks lattes cough), it’s a good sign to adjust either your planning or your behavior.
The nice thing about creating a budget? It is, ultimately, YOUR budget – and you can adjust it as you see fit.
It needn’t be a constraint; it can be your way of defining priorities and making choices…
… with very little math required.
Kate Hamill lives and works in New York City, where she consumes an inordinate amount of Sriracha daily. You can catch up with her on Twitter at @katerone.