Taking a nap in the middle of the day. Having your work area only one room away from your bedroom. Going on a long holiday without needing permission first. These are just some of the perks of the location-independent lifestyle.

As many virtual professionals will tell you, freelancer work isn’t all sunshine and rainbows though. The financial aspect can be especially daunting to deal with. You’ll soon find that your biggest stressors will generally revolve around money.

For example:

• Not receiving income regularly.
• Not having a retirement account set up.
• Not getting taxes filed automatically.
• Not being eligible for group insurance.
• Not earning enough money.

Maybe you’ve experienced these pains firsthand. Maybe you’d rather avoid getting into these situations. Either way, you don’t have to live like that. It’s possible to stay on top of your finances without getting anxiety—simply follow these freelancer budgeting tips.

Budgeting Tips for Freelancers

Keep track of your time

Time is a precious resource for freelancers. When you manage your time properly, you’ll be more productive and earn more. It’s up to you to monitor it though so find a suitable system.

There are plenty of timekeeping apps available online such as EverHour and Time Camp so check them out.

Know your expenses

Know how much you spend on transportation, internet service, utilities, and food. This way, you’ll know how much you need to earn each month to pay for them.

With a baseline figure to cover expenses, you can easily gauge how much extra you have for leisure, savings, or retirement.

Be sure to consider the following in your computations:

• Housing – include mortgage, rent, property tax, homeowner’s association fees, and more.
• Internet – compare different internet providers and their plans to get the best rates.
• Phone – consider getting a postpaid phone plan or mobile data plan as backup.
• Food – count meals out and take-out as extras unless you rarely cook at home.
• Transportation – include fares, vehicle maintenance, gas, or car payments.
• Utilities – look at past utility bills and get the average amount while noting the highest months.
• Medical costs – add the cost of medications, regular check-ups, and outstanding medical bills.
• Essentials – compute expenses for personal care and clothing items you absolutely need.

Account for taxes

Even if taxes aren’t taken from your paycheck, you should still pay them. Look up the directives for personal income tax in your country to know how much you should set aside.

In the Philippines, if you earn less than P250,000 per year, you don’t have to pay anything.

Have emergency savings

Since your income varies, set aside money to cover at least 9 to 12 months of expenses in case of a financial emergency. If you have dependents, set it higher.

Give up extras but you’ll thank yourself when you need to fix your leaking roof or face something similar.

Pay for data backup

Here’s a less obvious budgeting tip.

Nothing can be worse than losing your work while you’re trying to meet a deadline. Redoing work means using time you could be doing other projects.

So, invest in a cloud-based service or an external hard drive to store your important files.

Save for retirement

Unlike office workers who are guaranteed pension, freelancers like you have to set up a retirement account on your own.

Schedule automatic transfers from the account (where you receive your pay) to a separate retirement account so you can stay on track with your savings plan.

Buy yourself insurance

You never know what may happen in the future, so it’s best to prepare for anything. By getting disability insurance, you’ll receive income in case of an illness or accident that keeps you from working.

Life insurance ensures that your dependents are provided financial aid should you pass on.

Set a weekly allowance

Limit your spending to a certain amount every week based on your monthly budget. Take it out in cash and only spend that.

Create a spreadsheet to track where it’s going, specifying the date, item, and amount. With this, you’ll know if you have extra left over for next week.

Cut costs where you can

Though you’re able to cover your expenses now, it never hurts to reduce your spending where you can so you’d have more for savings.

For instance, switch to a prepaid mobile plan if you don’t really need postpaid. Try growing some vegetables in your backyard too.

Consult an expert

Newbies in freelancer work may not be able to afford to hire their own bookkeeper at the moment. But if you run a team, it’s worth outsourcing your accounting tasks every now and then.

An accountant will give you sound financial advice, plus give you time to tackle more important tasks than bookkeeping.

More Than Budgeting Tips

Managing your finances can be complicated if you’re a freelancer but it’s something you just have to do. It gives you a clear picture of your financial situation, helps you manage your money better, and allows you to enjoy the benefits of working from home more.

If you’d like more budgeting tips or other advice for freelancers, we at Remote Workmate are here to serve. Our blog is full of information you’ll find useful in freelancer work. Meanwhile, we provide services wherein we connect you to clients as well.