How To Weather The Storm By Making Your Money Work For You

Managing Money For FreelancersUnless you’re an extremely successful freelancer, you’ll most likely find yourself holding an umbrella at some point or another. One month, you’ll have more than enough money to pay the bills. The next, you’ll find yourself considering the possibility of throwing in the towel.

What do you do when paying the bills each month requires a garage sale? Have no fear, there is one key thing that you can do to weather this proverbial storm.

Create A Budget

I know. I know. Creating and following a budget doesn’t sound fun at all (unless you’re weird like me. I spend way too much time staring at my profile on But we must always remember: This is a business!

Consequently, you must run your business in the same way that any other brick and mortar store would. That means following a strict budget and reviewing monthly statistics in an effort to expand your services and increase revenue. In an environment where money comes in sporadically, you need to ration out of your income as best as you possibly can.

How can I create a budget when I have no idea how much money will be coming in?

Quite simply, actually. First, in your favorite finance program (I recommend and Quicken), or even on a sheet of paper, make a list of your expenses. Make sure you include everything from the mortgage to clothing expenditures. A simple sample budget might look like the following.

  1. Mortgage: $900
  2. Gas: $200
  3. Clothing: $50
  4. Electric Bill: $100
  5. Food: $500
  6. Phone: $90
  7. Entertainment: $200

Don’t worry if you don’t know exactly how much you spend on each category. Just estimate, and be sure to revise your budget each month so that it more accurately reflects your spending habits.

Reorder Your Budget

Now that you’ve finished your budget….you’ve done that right? You haven’t? Why not? You’ll work your tale off for a paycheck, but you won’t spend an hour a week telling it what to do?

The next step is to sort your budget. Take the list that you just created and reorder it from most important to least. Needless to say, you’ll want to keep the flux capacitor fluxing (electricity), and food on the table before anything else. Refactoring our list, we could end up with the following:

  1. Food: $500
  2. Electric Bill: $100
  3. Mortgage: $900
  4. Gas: $200
  5. Phone: $90
  6. Clothing: $50
  7. Entertainment: $200

Obviously, each individual’s list will vary depending on his or her specific circumstances. In this situation, we’ve sent “Entertainment” and “Clothing” to the bottom of the list and have placed “Food”, “Shelter“, and “Electricity” at the top. If you’re still experiencing trouble organizing your list, just ask yourself, “Which of these categories could I get by without? When you have your answer, place those respective categories at the bottom. Keep in mind that this may mean that certain bills won’t be paid on especially bad months. But, better that the lights stay on instead of a credit card payment.

Send Your Income To Work

Now that we’ve given every dollar an assignment, we can start forcing our money to work for us for a change – no pun intended. As you sporadically receive paychecks throughout the month, you’ll first want to take care of the items at the top of the list before anything else. Then, as more money streams in, continue downward.

Let’s say, for instance, that you had an especially bad month – relatively speaking. You only earned $1800. This means that you won’t be going out to the movies or buying any clothing this month. The utilities always take precedence over summer blockbusters – unfortunately.

What’s the best way to “set money aside“?

The answer to this question will greatly depend on your “finance strength”. If you freely admit that you’re not good with money, why not use the envelope system? It is a statistically proven fact that people “feel” they’re spending much more when they use cash instead of cards. It is also a fact that people tend to spend anywhere from 8-14% more on each purchase when they use a debit or credit card. Once or twice a month, pay a visit to the bank and withdraw enough money to fill your envelopes. In this case, I’d fill seven envelopes – one for each category.

As money trickles in, I continue to fill the remaining envelopes. When I need to fill up the gas tank, I take some money out of the gas envelope. When the “Entertainment” envelope is empty, I can’t go out for the rest of the month…etc.

Alternatively, you could consider opening a separate checking account that only receives funds for your monthly bills. There are several approaches. Choose one that is most practical for you.

What about the months when I have plenty of money coming in?

During these months, you’ll want to set the appropriate funds aside for each category. With any surplus, specifically set extra money aside for the slow months in your future.

What if I’m way over budget and can’t cover the essentials?

If you follow this plan, you should have money set aside from your previous “good months”. However, if you don’t, it might be time to face the facts. Consider sections of your budget that can be reduced or completely eliminated. Consider a part-time job.

A little extra hard work never hurt anyone. You can earn $15 an hour delivering pizza a few nights a week. Consider expanding your services. Personally, I use freelance writing to supplement my web development income.

Hold Yourself Accountable

Budgeting will only work if you’re on board. This means that you absolutely must hold yourself accountable! If the envelope is empty….the envelope is empty.

Jeffrey Way


About the author: Jeffrey Way is a full-time freelance web developer who is most comfortable when blending in with a corner at a Starbucks while working. When he’s not designing for his clients, he maintains a blog that contains thoughts and tutorials related to web development. He lives in Nashville, Tennessee with his fiance’ and dachshund.

Image in this post: Joshua Davis