How to Build a Boss Budget (When You’re a Freelancer)

If you’ve been following a basic budget for a while, congratulations. You’ve already built an important financial habit. Now it may be time to take the next step and create a budget that helps you move beyond simply covering expenses and toward achieving bigger financial goals.

Read on to learn how to level up your budget and check back for tips on how to flex your budgeting muscles even further.

What is a budget?

Let’s start by reminding ourselves what a budget is and what it’s supposed to do. A budget is a way to look at how much money you have saved, how much money you make, what you spend to maintain your lifestyle, and what debts you might need to pay off.

Most budgets are calculated on a monthly basis to reflect common billing and pay cycles. Some people like to budget on a weekly or bi-weekly basis to make the tasks more bite-sized, with bigger budget reviews on a quarter or bi-annual basis.

What is a basic budget?

A basic budget is the one that makes sure you’re living within your means, paying your bills, and attempting to put together a small emergency savings fund or pay down any debt. Your basic budget might include:

• Bills like housing, transportation, phone and internet, food, and subscriptions.
• Inflows from regular paid work, freelancing, one-time job payments, and any interest from savings or investment accounts.
• Debts such as a mortgage, car payment, or any credit card or medical debt.

If you’ve been managing your basic budget for at least a few months it’s time to start preparing for your boss budget era.

What is a boss budget?

A boss budget is one that prepares you for financial freedom. You’re no longer living paycheck-to-paycheck, so now you can start to focus on things like:

• Growing your emergency savings to reflect any changes to your lifestyle
• Buying a car or upgrading your existing car
• Making a down payment on a home
• Increasing your retirement savings
• Saving for a vacation, family event, or large electronics purchase
• Upgrading your insurance—health, life, car, etc.

You don’t have to tackle all of these at once. If you’re having a hard time deciding where to start, talk to a financial advisor who understands the challenges creative freelancers face before you take the next steps.

Can a freelancer have a boss budget?

Yes, a freelancer can absolutely have a boss budget! Leveling up your budget doesn’t mean that you have to work a traditional job that has regular raises tied to performance reviews.

Here are some things you can leverage when you’re bossifying your budget:

• Invest Your Windfalls: Tax refund? Unexpected inheritance? Large cash gift? Don’t treat these as free money to spend. These are investment opportunities. Save them so you can grow your nest egg(s) and benefit from them in the future.
• Save Your Debt Payments: Finished paying off a debt? Good on you! Instead of funneling those regular payments right back into your checking account where you can spend them, turn that into savings instead. You were already living without the money so you won’t miss it.
• Give Yourself a Raise: When’s the last time you raised your rates? If it’s been a while, do some digging into industry standards and the average rate for your area. Consider raising it (even by a little) to put yourself at the higher end of the scale and then investing the difference each time you get paid.
• Hide Your Money from Yourself: Does your checking account have more than enough to cover your monthly expenses? Set up payroll deduction (if any of your employers offer it) or a regular transfer from your checking account to a savings account. Out of sight often equals out of mind and it’s harder to frivolously spend money that you don’t have instant access to.

Note: You don’t have to live a no-fun, no-frills existence! It’s totally fine to give yourself a little treat, to keep a little cash from a windfall, or to loosen the budget a tiny bit. The trick is to maintain that discipline you’ve already created so that you’re prepared for the future.

What’s the best way to invest my savings as a freelancer?

As an individual in the entertainment industry, you already know not to put all of your eggs in one basket. The same rule applies to your savings and investments.

By distributing your money across a variety of accounts you’ll prepare yourself for emergencies while also giving future you a head start on purchases you’ll need to make. When you’re deciding where to keep your money, use a mix of:

• Regular or High-Yield Savings Accounts: Perfect for your emergency savings or a little padding for your day-to-day budget.
• Money Market Savings: Once you’ve got a nest egg, grow your savings with a higher interest rate while still maintaining access to your funds when you need them.
• Term Certificate: Ideal for saving for a specific goal. Because term certificates have a guaranteed rate of return and a defined end date, you’ll know exactly how much money you’ll have available for a big purchase.
• Retirement Savings: Retirement accounts are tax-advantaged ways to save for the future. Even if it’s just a few dollars every paycheck, these funds will have time to grow during your working years.

Take a look at your goals for your boss budget and map those to the savings accounts that best fit your unique needs. Still feeling lost? Don’t forget that a financial advisor can help you optimize your savings and investment strategies for your unique goals.