Freelancers have a unique financial situation. They do not have consistent incomes to count on every month. They can expect mountains, hills, and valleys in regard to income.
So, the question becomes, how to budget for those three events and how to save for the “valley” times and for long-term needs, such as kids’ college and retirement.
It’s not easy. But it can be done. Here are five tips for budgeting smart and ensuring that there is both an emergency fund and long-term savings.
1. Start tracking your expenses
You need a budget, but you cannot put one together until you know exactly how much you are spending each month. Track your expenses for about three months. You’re not really looking at your fixed expenses (rent, insurance, utilities, taxes, etc.); you’re looking at what are known as flexible expenses – those items that can vary and/or that you can cut if you need to.