Lesson 4: Budgeting and Finance

Introduction

One of the biggest stresses surrounding freelance web design is managing finances. Not having the safety net of a regular monthly income can put some people off from venturing into the freelance world. However, if you’re organised and meticulous then managing your budget and finances is easy. Below are seven ways to achieve this.

1. Track Your Spending

In order to be successful as a freelancer the golden rule is to spend less than you earn. You need to get a handle on just what it is you’re spending each month. If you don’t already, you should to track your spending either via a spreadsheet or app. There are plenty out there which can offer you an efficient way to understand what you are spending.

2. Commit to a Budget

The easiest way to create a budget is to keep a record of what you’re spending each month. You need to make sure that what you earn is enough to cover the bills and any personal spending. If you don’t have a budget to work towards then you could find yourself in debt or worse yet unable to pay the bills.

3. Reduce Your Outgoings

If you’re overspending there is a danger you could get into debt quite quickly. Once in debt it can be hard to get your head above water. In order to avoid this have a look at what you’re spending on average a month. Separate it into business and personal. Check all your direct debits as well. You’ll be surprised how many people pay for a monthly debits without realising what they are. Also, re-negotiate or change any plans you have such as mobile phone, internet or gym.

4. Give Yourself an Allowance

When you have a monthly spending limit figured out break this down into a weekly allowance. It will make it easier to account for your spending as well as what bills need to be paid and when. Remember, you’ll have to put money aside to pay your tax at the end of the financial year so opening an account for that is a sure fire way to be prepared and organised.

5. Pay Yourself a Salary

Once you’ve got yourself into a good routine with your finances and you’re generating a steady income the next step is to pay yourself a salary. Work out what you need to live on. This will include household bills, car allowances and personal spending. Once you have that figure you’ll know what you need to pay yourself each month to be able to live comfortably.

6. Keep Track of Everything

Any purchases you make that are for the business you need to keep a record of. As a freelancer there are a lot of things that you can claim tax back on such as office stationery and supplies, petrol (for client meetings) and any computer equipment you need to be able to do your job. Create a spreadsheet and list everything, making sure you keep all receipts for the end of year tax return.

7. Save as Much as Possible

It’s a good idea to put a little bit of money aside each month for a emergencies. Clients can be unpredictable at the best of times and you should never assume that you’re always going to get the same amount of work each month. If your situation changes you’ll be safe in the knowledge that you have a back up fund to help.