Freelancing has its perks, such as flexible hours. And its pitfalls, like inconsistent pay. I’ve been a freelancer for nearly a decade now, so I’ve had time to develop budgeting skills for riding out the salary highs and lows. But becoming a published author required taking my budgeting to an entirely new level: I received my book advance in four installments spanning two years. And those two years were busy — I spent the time doing revisions, promoting the book, and working on the next one. I wasn’t able to take on enough freelance work to support my family during that time, and I needed the advance to last as long as possible.
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I Made a Household Budget for Monthly Expenses
I listed all my regular monthly bills; using the previous year’s payments, I calculated the average cost of each, including insurance, mortgage, phone, electricity, and my quarterly tax payments.
I Accounted for Incidentals
Variable expenses formed a smaller portion of my budget, but were harder to predict: clothes, entertainment, travel, doctor bills, car repairs, vet expenses, the kids’ gymnastics, piano classes, etc. These were inconsistent from month to month, and were the riskiest areas for going over budget. I made sure to include the extra expenses in the summer months when the kids were out of school and we did more activities, the holidays when we had gifts to buy, and the winter months when we hunkered down and didn’t go out as much.
To figure out how much to allocate, I added up all the incidental expenses from the previous year, divided by 12 months, and combined that figure with my regular monthly bill estimate. It was tempting to trim my budget, to pretend I’d suddenly be spending less on clothes and groceries, but I didn’t. I kept it realistic.
I Break It Down by Day
I divided my monthly incidentals budget and divided by 30, so I had an idea of what I could afford to spend each day. Beyond the monthly bills, our daily budget is $40 per day. That means if I spend $60 on groceries today, I have only $20 to spend tomorrow. I keep myself honest by saving receipts for everything I buy, and since I need a lot of these receipts for tax purposes, it’s an easy habit to reinforce. At the end of each day, I sat down with my receipts and tallied my expenses. It was a minor hassle at first, but once it became a habit, I found it easy and handy to always have a mental note of where I was in my monthly allotment. It takes me only about three minutes a day to keep track, and I like that my money is never a mystery.