As a new freelancer, there are many lessons you must learn to be successful. Finding clients, marketing your business, iPhone or Android, and other technical issues are just a few of the aspects of running a freelance writing business. However one of the most important things you must learn is budgeting.
No, not the budgeting of business expenses, cash flow and income. Although business budgeting is important, understanding personal budgeting is essential to your success as a freelancer. You may have to be your own financial planner and account.
As a full-time employee, working in Corporate America, you have the security of knowing you will receive a paycheck on the first and fifteenth of each month. When you spend too much money on a gorgeous pair of shoes or indulge your love of fine dining too many times, you can always dip into your emergency savings or put it on a credit card. Not to worry, you can make if up with your next paycheck and everything will be alright.
Why Freelancers Need A Budget
As a freelancer, things work a little differently. Clients pay you on a monthly or irregular basis. That is, if you have clients and if they pay on time.
When your start a freelance business, you have your regular living expenses and business expenses. Ideally, you would start freelancing on a part-time basis, while you are still working full time. However, in this economy many people (myself included) start freelancing as a result of a lay-off or corporate downsizing.
Starting a new business can be expensive. One of the most valuable pieces of advice I received when I started my business was “Don’t buy anything. Use what you have or borrow from friends”. That might sound like strange business advice. The temptation to purchase a new printer, an online writing course or the latest smart phone can destroy your budget, especially when your income is reduced.
- Do your homework. Read The Money Book for Freelancers, Part-Timers, and the Self-Employed: The Only Personal Finance System for People with Not-So-Regular Jobs by Joseph D’Agnese and Denis Kiernan
- Track your expenses with online programs like MINT or just a note pad and pencil. There is probably an app for that.
- Think before you buy. Ask yourself: “Do I really need this?”
Don’t go window shopping when you are bored. Shopping malls and department stores are designed to make you want to buy something. Even if you can resist that cute skirt, you are bound to get a latte and a Cinnabun.
These tips may be simple, but in today’s world of ‘buy now, pay later’, many people lack not only the disciple, but the skills to live on a budget. The temptation to continue your same old spending habits will be strong. You might not be one car repair away from being homeless, but a latte here and an expensive dinner there could be the beginning of finance changes, late payments and NSF bank fees.
What has all this to do with writing? Shouldn’t we be concerned with grammar, SEO and creating compelling content? Yes. But you can’t create when you are worried about money and unpaid bills.
What resources do you use to track and control your business expenses?