When is a budgeting issue not a budgeting issue? (A blog post for freelancers)

When you’re a freelancer working out what you can afford to spend can be a nightmare. I mean, it’s ok if you’re established and making the big bucks, but what about when you’re just getting going, or if you’re in a field that’s more known for passion than paycheques?

How do you plan your spending when you don’t know how much money you’re going to have until you’ve got it? When you’re living job to job and struggling in between, it can feel like everything is out of your control.

I have lived this life. I know this issue well. I hate to tell you this, but this probably isn’t a budgeting issue, this is a business issue.

My first question for people in this situation is this: are you sure you don’t know what you’re going to make and when? Why not?

Many, many types of freelance work have a pattern to them; some are seasonal and follow the weather, or the academic year, or certain holidays. Others just tend to go through a cycle (pitch, contract, set up, work, close, payment) with relatively predictable timescales for each stage.

If you haven’t figured out the time patterns for your freelance work, it’s worth taking a few hours and trying to do so. These patterns determine when you get paid and that is vital information.

If you’re not a business-y type you probably avoid words like ‘cashflow’ but you’ll be familiar with the dreaded phrase ‘feast and famine’ or as I like to call it, having a lumpy income.

But unless you smooth out those lumps you’re always going to struggle, so go back through your invoicing, go back through your work calendar and look for the patterns.

Once you know roughly what happens with your work you can plan how you’re going to manage both your time and your money better. For example, your pattern might include something like this: “everyone needs my outputs about six weeks before the major holidays and seasonal events. I tend to get paid about two weeks after that”. So you can plot when those holidays and events come and reckon on getting paid about a month before each. Or else find another income stream with the opposite seasonal pattern to balance you out.

Or your pattern could be “it takes an average of six weeks from pitching to starting work, eight to finish a project, and another four from finishing work to getting paid” You know that you need to start pitching at least four weeks before work on each job ends, so you aren’t leaving a huge gap between projects and struggling for money if an invoice becomes overdue. You could also consider setting up your contracts for part payment midway through to prevent the gaps from getting too long.

Once you start paying attention to this, you’ll feel much more in control of what’s happening in your work. You can start looking for solutions and that will give you confidence as you promote your work.

It will also allow you to plan your spending, so you know how long you’re likely to have to make each payment last and you can make sure bigger essential outgoings tally in with times when you are confident of having more money.