Itshard enough to manage your moneyon a steady, regular income.
From my experience, you need a system.
Set it up once, and it protects you forever.
Heres the system I use.
Looking back, I made a few mistakes when I jumped into the freelance life.
I had no idea just how different freelancing was from a regular, full-time job.
My first year of freelancing, Idepleted my emergency fund.
The cost of health insurance also caught me off guard.
(Mine is only $200 a month, which is nothing compared to other premiums.)
Keep a cushion for irregular expenses.When your income is unpredictable, the last thing you need are unpredictable expenses.
In addition to a bigger emergency fund, I shouldve kept a cushion to pay for expenses like these.
The bottom line: freelancing can come with quite a few financial surprises.
I also started buying a lot more stuff for my businesssoftware, apps, that sort of thing.
In other words, stuff got complicated.
Whats more, I had to keep track of those expenses for taxes.
Separating my business and personal accounts made it easier to organize all of this.
Personal savings:An emergency fund that I never touch (well, unless theres an emergency).
it’s possible for you to use any other accountthe idea is to just keep your expenses separate.
Its like getting a paycheck from an actual employer, but that employer is me!
Thats not really helpful when it comes tobudgeting the irregular income you already earn, though.
My income has been fairly steady for the past year, so Im comfortable with that time frame.
If yours jumps around quite a bit, you might want to adjust your own average.
During months when my salary is lower, I draw from that leftover money when I pay myself.
I also reassess every few months and adjust my paycheck in case my income has dropped.
Personally, I like to keep things simple, so I pay myself one monthly payment.
Figuring out your average monthly income is the first step.
So before you calculate your own paycheck, you have to consider these expenses, too.
The payment comes directly from my business checking account.
I think of it as an emergency fund for my freelance business.
If it werent, I would adjust my retirement accounts or business cushion.
These last two expenses are a little less essential for a business, butits important to save for retirement.
Of course, the actual percentages can vary, too, since my income varies.
Your own percentages might vary, too.
I didnt when I was starting out (and there are some months that I still dont.)
Your own tax percentage will vary, too.
I determine my payday based on when my clients typically pay andwhen my bills are due.
And most of my clients pay before the 20th of every month, so thats my payday.
Thats my freelance income method in a nutshell.
It sounds simple enough, but its taken me a while to establish it.
