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.
My system is pretty low-tech: I just stack the receipts together all month and write the new total on the bottom of the top receipt. They live in my top desk drawer. Using an app each time I needed to do my daily tallies felt too time-consuming for me, but apps and spreadsheets work well if you prefer not to keep a stack of receipts on hand.
I Established a Pay Day
On the first of every month, just before the bulk of my bills are due, I pay myself (a holdover from when I used to work full-time and was paid monthly). I transfer my monthly allotment from savings to checking and clear the bills off my desk. I use online bill pay to set the date for each payment to be sent, late enough that my interest-earning checking account will get its portion of a penny, but early enough that I don’t risk a late fee. I transfer the same amount every month, and the months when I spend less carry over to the next month. If I get hit with a bigger bill (say, a car repair), the cushion is already built in.
I Stay Disciplined
I have no debt — aside from my mortgage payment — and I intend to keep it that way. (I have a no-annual-fee credit card and pay it off every month, and it's a rewards card, so I get cash back without ever paying a cent to the credit card company.) If I see a new jacket I really want, I already know whether I’m under or over budget for the month and what I can trim to justify the purchase. I do think it’s important to reward myself from time to time, and that’s built into my budget as well.
My two years on four paychecks have come to a close: I just got my final advance check.
As I work on my next novel, I’ll be taking on more freelance work and getting back into a more standard routine. While I don’t want my daughters to worry needlessly about family finances, showing them how to track expenses and live within their means has proven to be a valuable education. It is for any of us — regardless of whether we get paid once a week or only once a year.