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).
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.
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.