Designers: conquer the budget beast once and for all!

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Odds are, if you’re just starting out with your freelance business, money is tight and you definitely want to make the most of it. Budgeting can be very beneficial by helping you plan your spending, so when the time comes to cut yourself a paycheck or buy that new software you’ve had your eye on, the money is there and ready to be spent for that purpose.

Personally I’ve found that it’s difficult to create a budget and stick to it, but budgeting has become a necessary part of running my business. By keeping the reins tight, I make sure I’m always able to pay myself and get what I need to keep my business running smoothly.

Start with a template

You can find sample budgets online for ideas on what some of your expenses might be. I found one through my local chapter of SCORE.org to set up my budget. Not everything will be applicable to your business, and you may have to add some categories, but a template is a great place to start, since there may be some expenses that you hadn’t thought of (think paperclips and printer ink cartridges).

Guess high

When estimating expenses, if you’re not certain of exact costs, overestimate. You’ll thank yourself later for having money left over, or kick yourself for underestimating and running out of money.

Leave a cushion

Don’t spend everything you make if you don’t absolutely NEED to. Leaving some money in your business account is a wise move in the case of unanticipated expenses, late payments from clients, or a slow work month (hopefully you’re taking care of this problem with strategic marketing).

Put money aside

I use a separate savings account to put money aside for future purchases and tax payments. Taking it out of your spending/checking account helps keep it out of mind and lowers the temptation of spending it. Then it’s there when you need it, and can be rewarding to already have the money waiting for you when the time comes to spend it.

Be flexible

There’s no shame in changing some things around based on your actual needs. Be reasonable and honest with yourself when it comes to how much you need, and adjust your goals accordingly.

Stick with it!

It’s tough, but don’t give up. Once you get the hang of budgeting you’ll be happy with the stability it gives your finances.

Calling all freelance designers!

Do you have any budgeting tips of your own that have helped you? Share your tips with us in the comments.

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About Dan Sweet

Comments

  1. Well, I face the same problems like you as far as maintaining a budget is concerned. No matter how hard I try, I generally manage to overshoot the same by the end of the month.

  2. Because I work at home, I don’t have as many expenses as someone that rents out office space, so I’ve been able to work out a formula that works pretty well for me.

    I deposit 50% of all of the checks I receive into my business checking account (the other 50% I use to pay myself). 30% of that goes to taxes, and the other 20% adds up for things I need to pay for like marketing, new software/hardware, etc.

    During my first year, I didn’t really know what I was doing, so I was kind of shooting in the dark and stressing at the end of the year. Doing it this way seems like it’s working out a lot better and I’m not constantly worried about how much I need to save for taxes. It’s there when I need it!

    • @Melissa O.,
      Glad that system is working for you–I’ve thought about going to percentage route, but I prefer having a consistent personal income each month when it’s possible, so I go more toward putting set amounts aside for my paycheck, for taxes, supplies, etc on a monthly basis. Of course, that system fails if I run out of money…
      If nothing else, thinking ahead and knowing what your costs are going to be are key for staying financially sane, no matter the method.

  3. I’m still learning. I try not to spend to much, but I’ve been doing this for a year and I’ve writing down the items I’d like to invest in, purchase etc. To help grow my business.

    Recently I switched to Google apps for my business, which I like cause I love using google docs and they have a lot of nice features. I love the ‘gmail’ set up. It’s not very expensive either.

    I also work from home so the expenses are way down in that area. I have yet to do the taxes thing, but I plan on it. I am just now getting to the point where I can start saving the money I’m bringing in. So soon I will be setting up a savings account or something.

  4. It’s tough enough to budget money correctly when you’re on a regular income, but it gets really tough when your income is irregular and unpredictable.

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