The freelance lifestyle often makes it challenging to separate your personal life from your professional one. Your finances are not immune from this.
It’s so easy to blur the line between your personal finances and those of your freelance business. Learning how to budget properly for each side can help you keep them separated and allow you to be successful both personally and professionally.
To help you keep your freelance business afloat while also taking care of your personal finances, I’ve put together some tips from actions that have worked for me in the past when I’ve been faced with balancing personal and freelance money.
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Pay yourself as an employee
Rather than having your freelance revenue go straight into your personal bank account, set up a business account, and have any payments from clients go straight there.
Then set a salary for yourself based on your overall revenue and cut yourself a check each week. This helps you to more easily allocate some of your funds to go back into your business for business-related expenses like technology, office supplies, and advertising.
On the other hand, you know how much you’ll have each week to spend personally, which allows you to set your personal budget to account for things like food, bills, and other necessities.
Track your expenses separately
You’ll obviously have expenses both personally and professionally. If you aren’t tracking your expenses, you can easily lose sight of which ones are personal and which ones are business-related.
For example, let’s say you take a client out to lunch and it costs you $50. That’s a business expense, but if you fail to log it as such, when you look at your expenses, you might confuse it for being a personal trip out to eat.
You can use an accounting software like Freshbooks to easily track your expenses and split them between personal and professional. Or you can keep it old school and use a spreadsheet. Whatever suits your style.
Put aside emergency funds
You should always be prepared for unexpected expenses. Things happen in both your personal and professional lives, things happen.
On the personal side, let’s say your washing machine breaks. The clothing will start piling up, and your laundry room will become overrun if you can’t afford to pay someone to fix it…or worse…buy a new one.
And on the business side, as a freelancer you rely largely on your clients that are on retainer. They pay you each month, and you factor that in for your future cashflow. If a reliable client ends up walking away, your cashflow takes a huge hit.
In each of these cases, you can benefit (a lot) by having some emergency cash set aside. Make sure you have two separate stockpiles, so you don’t end up depleting the entire stash on one side and then you’re left high and dry when something happens on the other.
If you want to be a successful freelancer, you need to learn how to budget to keep your finances separate. Crossing over can leave you stuck when disaster hits.
There’s an excellent guide I recommend to people from debtconsolidation.com. To check it out, click here.
Budgeting separately for your freelance and personal lives can help you more easily keep track of your revenue and profits, and on the personal side, you can more easily budget for day-to-day expenses and live within your means.
Freelancing has tons of benefits and offers a flexible lifestyle. However, if you want to make sure it stays that way and avoid finding yourself stuck running back to the 9-5, follow these budgeting tips to keep your freelance and personal finances separate.
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