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Budgeting Tips for All Earners.

Updated: Jun 24, 2021

The first step in budgeting is understanding what you earn. You cannot budget funds that you do not have. Whether you are paid weekly, fortnightly, or monthly, always know what to expect for your up-coming salary. This way, you can start making realistic plans within your limit.


Budgeting tips for all earners. Use these tips to invest in yourself and earn more

This is especially necessary for freelancers, as your pay is heavily dependent on the number of projects you attain and the hours worked. As we know, a freelancer’s schedule is not always stable, and you may find yourself in a period of low employment. Should this happen, you will need a reliable source of cash flow.


How can I save enough money to carry me through downtimes?


We are happy you asked because here is how. Create a budget during a period of sustained employment and stick to it. The primary goal of any budget is to keep your expenses equal to or lower than your income. This is particularly important for freelancers as your aim is to ensure that you don’t go broke when the job flow dries up. Here are a few steps to help you along your budgeting journey.


Reduce Your Expenses


Start by making sure your budget is accurate. Take a long hard look at your current expenses and categorize them according to their importance.

If the “miscellaneous” category is almost the same as your rent or mortgage, then you should investigate and make some cutbacks.


Try to reduce larger categories by a certain percentage in as many areas as possible.

Two key areas that are usually ripe for budget cuts are eating out and entertainment. Yes, we know you work hard and deserve a little fun. But imagine the fun you will have to see less money taken from your account, and let us not forget the excitement of knowing the amount you have saved as a result. You can do this!




Set Realistic Goals


Make a list of all the financial goals you want to accomplish, short-and long-term. Short-term goals, like clearing a credit card debt, are usually achieved within a year. To do this, you would be required to reduce your expenses and keep closer tabs on your spending.

Long-term goals, such as saving for your retirement, may take years to reach. Keep in mind that these goals are your personal desires and may change over time. The important part is to always start with a plan. First, identify your priorities, then prepare a budget as your guide.


Clear All Credit Cards Debts


Credit cards are a lifesaver in times of crisis but can also be your Achilles’ heel. We all know how great it is to have a credit card. If you do not, be grateful. You can do without that incessant worry of high-interest rates due to late payments and those constant email reminders. You are not missing out.


However, this is not always the case. With a fixed income and an organized budget, it is possible to stay on top of your credit card payments. Nevertheless, this expense is one you are best to do without, if possible. So, if you have credit card debts, consider paying them off completely.


Once you have completed the payment, your salary has opened significantly, and you can invest that money elsewhere. May we suggest an emergency fund.


Build an Emergency Fund


The next step in establishing your budget is to build an emergency fund. Try to deduct double the living expenses a month and save the extra funds in a separate account. Otherwise, you can have a portion of your pay deposited into your saving account via salary deduction for emergencies. Remember, freelancers are usually paid per hour so, if there is no work, then there is no pay, but there will still be expenses that you need to cover.


Emergency funds may also take the form of a Trust. This plan is a little more complex and costly but definitely worth it for those who can afford the recurring fees. Trusts are created to provide legal protection for the trustor’s assets, ensuring that they are distributed according to the trustor’s wishes. Each institution has different requirements for establishing and maintaining a Trust but the key benefit of having a Trust is the financial peace of mind.


Limit for Unbudgeted Spending


After deducting all expenses, there may be some money left, and however large or small, it is to carry you until your next pay. If a sizeable amount is left over, then, by all means, have some fun. However, before you go spending, make sure it will not interfere with anything you have planned.


We recommend spending on items you may need, for instance, a new suit for work or an appliance you have meant to get. We call them “little needs.” They are not urgent enough to make it on the current budget, but they help enhance your life. Slowly attaining your little needs make for a comfortable life and prevents them from becoming an urgent need in the future. Also, with the little needs out of the way, this portion of funds can later be spent on things you want but be sure to keep close tabs on your spending.


Track Your Spending


Organize your expenses based on priorities and identify recurring fees separately from a one-time payment. This information will enable you to predict your upcoming payments to determine how much to budget for in the future.


Though, it is relatively easy to throw your budget out of whack with small purchases. Track your spending to understand your spending pattern. Save your receipts and document your purchases, categorizing them so you can identify areas where you have difficulty controlling your spending. Until you have your spending in check, do not take on new long-term expenses.


Avoid New Recurring Expenses


So, your salary and credit qualify you for a nice fat loan, should you take it? Keep in mind that the bank only knows your income, as you have outlined, and the expenses included in your credit report. The bank would not know of any other financial obligations that may prevent you from making payments on time.


Similarly, taking out an item on hire purchase may not be wise. You would only be incurring debt faster than your salary can cover. It is for you to decide whether an additional recurring expense is affordable based on your income and other monthly obligations.


Shop for Reasonable Prices


When working with a budget, you can not afford to have expensive taste. Now the aim is to get more out of your money. This means shopping around and comparing prices to ensure that you are spending less. Look for deals, discounts, and cheaper alternatives whenever possible.


Doing so may be difficult during your high employment period when the money is rolling in, but when shopping, imagine that you are broke. Over time, when your salary increases, then you may be able to accommodate a little more lavish spending, but even then, always shop within your means.


Plan and Save for Major Expenses.


Delaying gratification rather than sacrificing the essentials or putting a new charge on your credit card allows you to evaluate whether the purchase is necessary and even more time to seek out lower prices.


Planning for larger expenses than saving towards them is a better option than exhausting your credit or skipping bills and facing the resulting consequences.


Always Follow Your Budget


After creating your budget, ensure to track your expenses in each category regularly. Preferably every day of the month, but things happen, we understand. To make it easier, record your income and expenses in the same platform, spreadsheet, or budgeting software used to create your budget initially.


In the event, you are unable to budget the old fashion way, no sweat. You can employ a mix between the envelope system and saving accounts, where you would divide your funds into separate envelopes and saving accounts for different spending categories. Smaller expenses may be stored in the envelope and larger sums of money secured in your bank account. When either an envelope or an account becomes empty, halt all spending for the corresponding category.


When the spending limit is reached for a particular category, you may either stop that type of spending for the month or allocate money from another category to cover that additional expense. As best as possible, try avoiding tapping into the funds for one category to cover another. So, always keep close track of your spending.


The rule of budgeting is to keep your expenses equal to or lower than your income. With this goal in mind, you must be meticulous when structuring your budget and following it. The moment you lose sight of this rule, you run the risk of becoming consumed by debt. If you do not have a strict budget to follow, at least understand your income and expenses enough to pencil down a simple plan.


Always start with a plan.



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