How to Prepare a Freelancer Budget?
A freelancer budget is a financing tool for estimating the money that is coming in and going out from a freelancer’s pocket. Like other budgeting plans, a freelancer budget also covers a specific period to ensure measurability.
According to Caitlin Pearce of the Freelancers Union, 1 out of 3 Americans is currently into freelancing. Since most freelance jobs don’t come with perks, it’s up for the employee themselves to avail of such benefits. Because of this, freelancers should know how to plan out the budget properly. If you need to make one, we have tips below to help you out.
1. Identify Your Sources of Income
The first thing that you should do when creating this budget sheet is to identify where your finances are coming from. Are you relying on your salary, donations, savings or do you have other sources? This applies not only to freelancers but also to individuals who like using personal budget plans.
2. Determine Where to Spend
To help you in setting an effective and realistic budget, you also need to determine where you’re spending your money. It’s like making a balance sheet wherein it contains a list of both income and expenses. Also, don’t only log down the expense items, make sure to indicate their corresponding rates as well.
3. Set a Target Savings Amount
How much money are you planning to keep after following your budget plan? This is an effective way to ensure that you don’t spend beyond your planned budget. However, it’s not necessary to have savings after the plan, but it’s actually better than having insufficient money.
4. Initiate a Deadline or Time Frame
Like any other type of plan, budgets should also follow the SMART rule, and part of that is being time-bounded. Giving your budget plan a timeline or time frame will enable you to have a specific date to look forward to. Moreover, this helps make your budget plan more measurable.
5. Finalize Your Budget Plan
Whatever software application you prefer, start building up your actual budget report. Preferably, we would tell you to use either Microsoft Excel, Google Sheets, etc. type applications because they already come with a formula feature to handle all the numeric data and calculations.
What are the different types of budgets?
- Surplus budget - A surplus budget is when the income is larger than the expense.
- Deficit budget - A deficit budget happens when the total expense exceeds the total income.
- Balanced budget - This type of budget occurs when the total expense is equal to the total receipts.
What are the classifications of budgets based on capacity?
- Fixed budget - This refers to a budget that remains fixed regardless of the activity.
- Flexible budget - This budget changes according to the activity level.
What are the classifications of budgets based on the scope?
- Functional budget.
- Sales budget.
- Production budget.
- Cash budget.
What are some examples of budgeting tips?
- Do the 50/30/20 method.
- Prioritize your expenditures.
- Make a realistic schedule.
- Keep an eye on your progress.
What are the largest freelance jobs in the United States in 2019?
- Freelance writers.
- Freelance accountants.
- Freelance graphic designers.
- Freelance programmers.
- Freelance software developers.