Five tips for how to effectively manage your finances, including cutting food costs, planning for long-term savings, tapering spending, and looking for unorthodox ways to save cash.
There are lots of benefits that accompany a freelance marketing career, but a steady paycheck isn't usually one of them. If a rough month gets you down, don't assume you need to pull out your résumé just yet -- start by pulling out your budget instead. The life of a freelancer is filled with ups and downs, but as long as you manage your money wisely, you should be able to continue your career as a freelance marketing entrepreneur.
1. Check Your Monthly Budget
The only way to effectively manage your finances as a freelancer is to organize your budget. Use an online budgeting program, such as Mint, to get a handle on your expenses. Be sure to include prorated monthly figures for quarterly taxes and annual expenses, such as property taxes or car insurance premiums.
To get a good picture of your income, use your six-month average, or budget around your worst month's compensation from the previous year. Then, see if your expenses outweigh your estimated income. If they do, it's time to start looking for ways to save.
Discretionary monthly bills are an excellent place to start cutting back. For instance, consider switching out your cable TV or smartphone data plan for a less expensive option, and cancel your Netflix subscription or any other unnecessary subscription services.
Check your home energy bills and start managing your energy consumption wisely. Lower the heat and throw on an extra sweater during the winter, and install ceiling fans for summer use. You could even install a Wi-Fi-enabled programmable thermostat to control the temperature of your home from your mobile device when you're out and about.
2. Slice and Dice Your Food Bill
If you're not clipping grocery coupons, you're doing yourself a disservice. Take advantage of coupons for foods you already buy, and check the Internet for farmers' markets in your area to help cut produce costs. If you own a smartphone, investigate grocery coupon mobile apps, such as Grocery Smarts Coupon Shopper, to slice your food bill even further.
3. Look for Unorthodox Ways to Save Cash
When you're a freelancer with a fluctuating income, creativity can go a long way toward a balanced budget. Small lifestyle changes eventually add up to big savings, so drop a water bottle filled with pebbles into your toilet tank to reduce water waste, reuse plastic grocery bags as small garbage bags, and air-dry your clothes instead of running your dryer.
4. Plan for Long-Term Savings
Stop stressing over long-term savings, such as your retirement or emergency fund, and build it into your monthly budget. Determine exactly how much you want to save over the course of a year, then check with your bank to see if they can automatically transfer a certain portion of each deposit into a separate savings account pigeonholed for these purposes. Simply reduce your estimated income by the amount you plan to withhold each month.
5. Taper Your Spending
Another way to get a handle on your finances is to simply cut back on daily expenses. If you're in the habit of stopping at Starbucks for a cup of joe, brew it at home instead. If you have a weakness for new clothes and other accessories, give yourself a spending limit in these areas. And pay attention to entertainment expenses -- if you're always going out with friends, occasionally skip the night out and sub in a BYOB night at home.
All of your budgeting efforts go to waste if you don't review and update your accounts in a timely fashion. For instance, if your health insurance increases, it's important to make necessary budget adjustments immediately. Budgeting takes time and effort, and it's a job that's never completely done.
What other ways can a freelance marketer budget effectively?
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David Bakke is an Atlanta-based social media strategist and contributing member of the MoneyCrashers.com team. He is the author of the personal finance book, "Don't Be a Mule" and writes about small business marketing tactics, money management - including banking and credit cards, careers, and methods for people to get out of debt.
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