Budgeting doesn’t have to be a dirty word
Budgeting isn’t the most glamorous topic to talk about, and it isn’t an ideal way to spend a Friday night. It is, however, one of the most helpful things you’ll do with your finances, especially if you’re wanting to become a full-time freelancer.
Think about it: the most powerful tool you have is your money. If you don’t have money, you can’t do much — let alone build a freelance business. If you don’t budget, growing your business will be difficult — especially when it comes to buying new equipment.
Take control of your money
Budgeting tells your money where to go.
It doesn’t have to be a hindrance or what prevents you from getting what you want. It also doesn’t have to be so restricting that you never have fun. If you don’t tell your money where to go, you’ll end up wondering where it went by the end of the month. Not good.
There’s a saying that goes “If you fail to plan, you plan to fail.” If you create a plan and stick to it, you won’t have to worry anymore, right? It’s that simple!
Starting a freelance business doesn’t happen overnight. It’s about being intentional — and that starts with budgeting.
Self-control
Many people say they have a “budget,” but don’t have the self-control to stick to one. Self-control is often disregarded in the realm of budgeting.
Think about it. When your favorite store is having a sale, it’d be stupid not to take advantage of it, right? Well, not necessarily. Indulging here and there adds up. Buying a few things “because it’s on sale” typically means you left the store paying way too much for things you don’t even need. We’ve all been there.
It takes time to develop self-control. Don’t expect to be good at it right off the cuff. Developing self-control takes motivation and determination. A little sacrifice now means big a reward later. Self-control plays a vital part in the success of your budget.
Plan your spending
Spending money usually means business has been good, and that means new equipment can be purchased, making everyone’s lives easier.
If you budget for a new camera, then you won’t feel guilty about buying one. Because you planned on buying it in your budget. How liberating is that? Sure, it took three months to save, but you earned it! Budgeting for a new camera gives you permission to spend.
Can you think of a successful business that doesn’t use a budget?
(We couldn’t either.)
Every move a business makes should be intentional. All successful businesses keep track of monthly operations and expenses — whether it brings in millions, or if it’s your personal side-business making $10K per year.
Strategizing your finances will set your business up for growth and success. This might look like:
- Allocating expenses for advertising,
- Budgeting for new gear,
- Paying 2nd shooters,
- Buying meals for travel, or
- Setting aside profit to take home every month.
You can and should budget for as much as possible. You’ll realize how well a simple budget can work for you. Again, think of it like giving yourself permission to spend without the guilt.
Make bookkeeping easier
Every year, approaching tax season sparks panic in the hearts of citizens. Riots erupt in the streets, and — okay, not necessarily, but the sentiment is there. The fact is, it’s not uncommon to scramble, especially if you run your own business. It may seem overwhelming to track business expenses throughout the year, but it doesn’t have to be.
Setting a budget and utilizing free resources on the internet makes bookkeeping easy. It’s as simple as tracking weekly expenses, categorizing transactions, and generating a report at the end of the month. Your budget should help clear up the amount of time it takes to categorize your books every month – cause now you know what to expect when sifting through all your transactions.
Budgeting doesn’t have to be overwhelming or difficult! It can be easy and effortless. It’s all about forming a habit to be intentional with your spending (rather than doing things on the fly).
Separate bank accounts
Having separate bank accounts is a simple idea, yes, but it’s often understated in its importance. Eliminate the guessing game between transactions. Have one account for your business, and an account for everything else. Having separate accounts will help trim down the size of your budget immensely, which will make creating a budget less daunting.
You’re more likely to follow through with budgeting and planning if you make it easier on yourself. If it’s overwhelming, the procrastinator inside you will inevitably resurface and wreak havoc on your life!
Tip: In addition to making budgeting easier, splitting bank accounts will protect your assets from certain liabilities your business brings. Whether you’re a Sole Proprietor or an LLC (we’ll cover the difference between these two business types later in this series), we always recommend keeping your personal bank account separate from your business account.
Conclusion
Keep in mind: there will be times you create a budget and fail to follow it. That’s okay.
Don’t expect to be a budgeting professional within the first few months of doing it. Pace yourself. The best way to climb a mountain is taking one step at a time. Cheesy as it may be, it’s true. Get started with your budget today.
You got this. Building a freelance business takes time and intentionality, but the payoff, in the long run, is well worth it. Start with a budget and take one step closer towards growth and success.