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How to Budget as a Freelancer With Feast-Or-Famine Income

Published: March 11, 2024
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Bradley Schnitzer
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how to budget as a freelancer

Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end.

Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end.

Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end.

Our top picks for September 2026

Unpredictable Income Requires Predictable Expenses

One of your cash flows — either income or expenses — has to be predictable if you want to budget effectively.

Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end. Use what you learn to decide whether the change will simplify your daily work.

Start with your necessary expenses. These include the following.

  • Housing: Rent/mortgage, mandatory insurance policies, and property taxes.
  • Utilities: Utilities aren’t predictable, but you can estimate. Look at last year’s utility statements, see how much you paid each month, and budget for each month this year accordingly.
  • Food: Groceries are the only food considered necessary. Fast food, restaurants, and any other form of dining out are extra.
  • Internet: Every freelancer needs an Internet connection to work. Fortunately, Internet plans tend to cost the same amount every month.
  • Phone:Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility.
  • Healthcare: Account for medications (prescription and non-prescription) you take regularly. Include copays for regular doctor’s visits, too. Additionally, consider medical bills you’re paying off.
  • Transportation: Include your auto payment, insurance, gas, maintenance, and registration if you have a car. If you don’t, budget for any public transit passes you have.
  • Minimum payments on debt: Minimum payments are necessary because not paying them can damage your credit score and lead to late fees. Anything beyond the minimum counts as savings because it would reduce your principal and future interest charges.

Once you work out these expenses, look for areas in which you can cut spending. Living lean early in your freelance career can make budgeting easier.

Track Your Income and Establish a Conservative Estimate

Track your freelance earnings for several months. Calculate the average, then subtract 30% of that number for taxes. This is your monthly income for budgeting purposes.

If you have several regular clients, figuring your income is easier. Budget based on your steady clients, and put earnings from one-off projects towards debt or savings.

Open a Separate Savings Account For Taxes

A clear view of your accounts starts with a workflow that fits your business. Bring invoices, expenses and financial reports together, then review the details that matter to your team. Compare the available tools, try the everyday tasks yourself and choose a setup you can maintain as your business grows.

Open a separate account to save for your quarterly tax bill. Everyone’s tax situation differs, but saving 30% of your earnings in taxes is a good guideline.

However,  accounting software like QuickbooksA clear view of your accounts starts with a workflow that fits your business. Bring invoices, expenses and financial reports together, then review the details that matter to your team. Compare the available tools, try the everyday tasks yourself and choose a setup you can maintain as your business grows.

person working at home

Be Prepared For Emergencies

Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end.

Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end. Use what you learn to decide whether the change will simplify your daily work.

Don’t Forget About Retirement

As a freelancer, you don’t have an employer-sponsored 401(k) — but you still have access to numerous other retirement accounts.

Let’s cover your individual retirement options first.

  • Traditional IRA:Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end.
  • Roth IRA: Roth IRA contributions are not tax-deductible, but retirement withdrawals are tax-free. Like traditional IRAs, Roth IRAs have a 2020 contribution limit of $6,000.

Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility.

  • SEP IRA:Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end.
  • SIMPLE IRA: You can contribute 100% of your net self-employment earnings up to $13,500 as an employee for 2020. On the employer side, you can contribute 3% of your net self-employment earnings.
  • Solo 401(k):Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end. Use what you learn to decide whether the change will simplify your daily work.

Making Your Income More Predictable

Freelancing doesn’t have to mean putting up with an unstable income forever. Here are a couple of tactics for securing a more stable income while you work for yourself.

Negotiate Retainer Agreements

Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end. Use what you learn to decide whether the change will simplify your daily work. Choose a process that suits the size of your team and the way your business operates.

income

Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end. Use what you learn to decide whether the change will simplify your daily work. Choose a process that suits the size of your team and the way your business operates.

Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end. Use what you learn to decide whether the change will simplify your daily work.

Tracking each of these retainers is time-consuming, though, especially if you have a client that’s slow to pay. If you want to live on retainer earnings, you must ensure that you get paid on time each month.

Diversify Income Streams

Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end. Use what you learn to decide whether the change will simplify your daily work.

Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility.

You could branch out into other types of products, too. Back to the freelance programmer scenario, you could build and sell a piece of software.

Our top picks for September 2026

A Solution to the Feast-Or-Famine Predicament

Choose a process that suits the size of your team and the way your business operates. Keep records consistent, review them regularly and give each person a clear responsibility. When evaluating a new tool, work through a realistic example from beginning to end. Use what you learn to decide whether the change will simplify your daily work. Choose a process that suits the size of your team and the way your business operates.

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Bradley Schnitzer
Bradley Schnitzer helps businesses gain loyal customers through informative content pieces and persuasive copy. He is passionate about personal finance and helping budding freelancers further their careers.