Last week, I explained how to create a standard budget, using the 50/20/30 Rule as a guideline.

But what if you don’t make steady money*? What if you’re a freelance writer who is paid by the word, a solopreneur, or an individual who otherwise inhabits the gig economy?

Then read on. This blog post is for you.

* = You may be making bank as a solopreneur, and if so, that's fantastic! Please share your secrets in the comments section below. All I mean by “you don't make steady money” is that you’re not getting a direct deposit paycheck from Jan in accounting every other Tuesday.

Budgeting as a Freelancer Inverts the 50/20/30 Rule.

On the last day of the month, I sit down, pen and notebook in hand, Excel spreadsheet open on my laptop, and plan for anticipated income and expenses for the coming month.

While the standard budget we walked through last week accounts for fixed expenses, incidentals, and savings goals, solopreneurs can't count their chickens before they hatch. (At least until we have a few years' worth of data to analyze for profit-loss patterns, that is.)

This is why the spreadsheet I’ll be walking you through (and offering for download at the end of this post) looks a little different.

You may notice that the main portion of the spreadsheet focuses solely on fixed expenses.

Expense types in the blue section are fixed expenses, like housing costs and the estimated cost of groceries. I also have a few fixed monthly expenses that, while I don’t absolutely need them, are nice to have. They can be found in the red section.

Blue and red are followed by a yellow section, which compares the total fixed costs I’ve anticipated for the month with the total amount I’ve earned so far. 

During my budget planning session, I write my anticipated fixed cost for each subcategory in its cell in Column C. Once the cost has been paid, as in the case of rent on the first of the month, I put the cost in bold text. This tells me that, whether or not I made enough money to cover the cost, it’s been paid.

For items like groceries, which may have a variable total cost from month to month, I use the brown cells in Column E to update the actual amount and then update the official cost in Column C right before the month ends. (If you over-budget at the outset, this update can be a welcome surprise!)

Adding in Monthly Earnings.

As I get paid throughout the month, I add these earnings to two sections of the spreadsheet.

First, to the “Total Funds to Date” space in cell G2.

Second, I distribute it among my fixed expenses in the “Funds Accrued to Date” section, cells D2 to D14. For instance, if I get a paycheck for $500 after taxes, $463 of it can go into rent, and the remaining $37 can go towards groceries.

If you’re an Excel whiz, you may find my manual data entry positively Cro-Magnon. I’m sure there’s some way to add a formula that automatically distributes G2’s value in a waterfall pattern across cells D2 through D14. However, I like to do this manually because the process allows me to compare the numbers in G2 and C16 to make sure they match. (#ControlFreak)

Until the value in C17 (“Still Needed”) equals 0, I try not to create any incidental expenses. This means that if my friends want to hang out, we’ll have to do something that is free or else relies on fixed expenses.

Don’t worry, though – I’m still having fun. Some of these hangouts have included free trial exercise classes, picnics in the park, and wine nights on one of our couches, parked in front of Netflix.

Guilt-Free Incidental Expenses

If you are having a great month (i.e. you meet all of your fixed expenses for the month), then first off, congratulations! It’s tough to hustle, and you should be proud of yourself for doing so well.

At this point, I recommend you give yourself up to 3 incidental expenses, guilt- and penalty-free. By creating a price quote, you can add this wishlist to your spreadsheet when you do your budget planning, thereby gamifying your hustle with some extrinsic motivation. 

In this example, I want a haircut, which I’ve estimated to cost $120, new running shoes for $90, and a fancy date with my boyfriend for about $75. These purchases can only be made as I hit those benchmarks: $120 over fixed income? I finally get rose-gold highlights. $90 over? Hit up Asics.com. $75 more over? Have a night out with my honey.

If you’re STILL earning money after that, then I salute you! You are having a fantastic month, my friend.

If this is happening to you, then please refer to the peach section at the bottom of the spreadsheet. Here, I recommend finding a ratio split for all of your “Total Extra Cash,” as tabulated in D28.

I like to go with a 1:9 split, with 10% going to fun and 90% going to savings. This may seem monastic, but really, it gives me a fair amount of wiggle room in case I exceed that 10% parameter.

Tracking Spending to Promote Savings.

Keeping this spreadsheet doesn’t just show me how to budget during the month. It also shows me how much I can sock away at the end of it.

As I’m planning next month’s fixed expenses, I’m also calculating savings. If there’s a remainder left in C17 (“Still Needed") by the last day of the month, I know that I'll need to transfer that – plus any unearned incidental purchases I slipped up and spent  – from savings to checking if I don’t want to risk overdraft feeds.

However, if you have an excess, you can distribute the 90% savings (again, less any incidentals where you may have overstepped that 10% boundary) among your savings goals and accounts.

I hope you found this post helpful! If you want more help and resources, I’ve created a handy, downloadable template based on my budgeting spreadsheet. You can follow this link to download it for free.

Furthermore,

• If you are interested in having your question answered on an upcoming Money Monday, fill out the form below.

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• If you're a reader with related advice to share, I'd love to hear from you! Share your thoughts in the comments.

I look forward to chatting with you soon!

Cheers,
Jessica

Jessica Hatch is not a Registered Investment Advisor, Broker/Dealer, Financial Analyst, Financial Bank, Securities Broker or Financial Planner. The information in this blog post is provided for informational purposes only. It is not intended to be and does not constitute financial advice, is general in nature and not specific to you. Ms. Hatch is not responsible for any investment decisions made by you. You are responsible for your own investment research and investment decisions.