One of the most important skills you can learn is the creation of a budget. When freelancing, whether it is modeling or dancing or anything else, it can be difficult to start creating a budget because you do not know how much money you are bringing in each month. When someone has a job with a salary, they may find it easier (or not) to allocate their money. If they know that they only have one stream of income, and that will make them $6000, it is easy to know where all that money is going.
When you know you make an average amount of money per month, but you do not know exactly how much is coming in, it can be difficult to budget. Here is my plan on how you can create the best budget for someone who is working in a field in which the amount of money they make per month varies.
First: Add up all of your necessary expenses.
Add up the money you spend on rent/mortgage, your car, insurance, and any utilities which are necessary per month.
Second: Add up all monthly expenses that are reoccuring, but not necessary.
This includes your subscriptions (netflix, amazon prime), your hair and makeup, housekeeping, and any other bills that you do not need but are used to make your life easier and better monthly.
Third: Make sure you are saving as much as possible.
My suggestion is to save per month at least 20% of what you make. However, my practice was to save almost all of the money that does not go towards necessities. It can be difficult to do this, but it is important.
Remember, when you invest your money, your savings will make money for you. So though right now you may be making money, and there is a lot you might want to buy, if you save that money to invest it, then you will be able to afford more, for yourself in the future.
Fourth: To create your budget, look at last months money.
To me this is the most important part of my personal strategy. To create my budget, I looked at what I made in the preceding month. It is easy to do this if you have one bank account that you put all your money into. Having one bank account just for your cash deposits is the easiest way to keep track of your income, but you can also keep track by writing it down. I suggest putting the money in the bank, because this can make it easier to do your taxes, especially if you are doing them quarterly. It also lets you know how much you made, so you can budget accordingly.
When you do want to buy things that you do not need for work, such as clothes, purses, trips, and events, you must create a plan for them. Look at how much you are bringing in per month, and then take whatever percentage you want to spend on that. You can also look at dollar amounts, but I often feel that percentages are more fulfilling, especially when what you make varies per month.
For example, if you allowed yourself a budget of $400 per month on clothes, you may be at a higher deficit in a month you don’t make as much money. However, if you promise yourself that 2% of what you earn will be on clothes, including putting money aside from that 2% a month for a larger purchase such as a designer bag, then you know you will not be exceeding what you make in a month on a larger purchase.
Budgeting is very important because this is what will allow you to save for your future. The goal to make money now doing labor, so later you can allow that money to make more money for itself. My goal is for all of you who read womenswhork, to become wealthy, and that cannot be done charging hourly fees. You have to be smart with the money you are making now, so it can make you more money in the future.