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Billing Your Freelance Clients But Still Broke? Here’s How Smart Budgeting Can Help

By Uwe Dreissigacker

So you’re a freelancer extraordinaire. You have your game down pat, right from sales and marketing to the actual service delivery and customer service. You’ve managed to establish a steady stream of happy, satisfied, paying clients, which also means you’re billing regularly. But something about your finances is causing you sleepless nights, and that’s because you’ve noticed that for a while now you’re always broke. What gives?

When you suffer from a lack of cash, even with a steady stream of paying clients, it’s likely you either lack a budget or fail to follow one that reflects your income realities. This can lead to some serious financial distress, but how exactly do you remedy it? Well, often the solution is as simple as creating and implementing a smart budgeting plan.

Having funds in the bank doesn’t automatically mean you can make any purchase you’d like. Pending bills and other unmet expenditures have to be factored in prior to the next payout.

Your freelance life will become way less stressful when you improve your financial skills, and the good news is you do not need a degree in accounting to practice smart budgeting. So if you’re experiencing difficulties with money management, here are some smart budgeting tips to help get your financial life back on track.

1. Create a transformative budget

A lot of folks don’t budget simply because they find it boring. Plus the thought of going through a process of tracking expenses, doing the math, and ensuring everything tallies up scares the daylights out of them. But if you’re struggling with money, you really have no excuse not to budget. It’s a savior.

Think about it this way: if all it takes to put your financial life back on track is a cumulative couple of hours each month working on your budget, why not do it? Rather than stress yourself out thinking about the painstaking budget creating process, focus instead on the benefits and value it will bring to your life and dive in.

2. Actually use the transformative budget

All your efforts will be useless if you create a budget and sit on it. Budgets are living financial documents that are not meant to gather dust filed away in a cabinet. The magic happens when you use your budget, so refer to it before you make any big spending decisions

Let it be your guide. Ensure you update it as you settle bills and spend on monthly expenses. Staying on top of things will ensure you’re always aware of how much money is available to spend. Say hello to being a well-oiled, carefully measured spending machine.

3. Track your expenditures like a hawk

Small unchecked purchases can easily ruin your budget because they can add up very quickly. The best way to avoid unpleasant surprises is by tracking your spending to uncover places where you might be inadvertently overspending. Always keep your receipts and record purchases in an expense journal with clear labels and categories so that you can easily identify some of the areas where you have difficulty staying within budget.

4. Avoid unnecessary loans

Your credit and income could qualify you for certain loans and credit cards. However, if you don’t really have a need for them, why bother? Unless there’s a genuine expense you can’t afford and you’ve determined that you can service your monthly repayments without affecting your other obligations, then there’s really no need to take on debt.

5. Allow some wiggle room for unbudgeted spending

Your net income, or the money available after deducting your expenses from your earnings, is a very important part of your budget. The money left over after expenses can be used for fun activities and entertainment, but only up to a certain limit. Do not go all crazy with this money. Try to keep some and stretch it out to last the entire month.

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6. Save up for major purchases

When you learn to delay gratification, half of your financial woes will go away. Learn to prioritize essentials over impulse buys and take time to evaluate your decisions. Decide if something is necessary after shopping around for discounts and comparing prices.

When you save up money for major purchases rather than using credit, you avoid paying exorbitant interest. Better yet, you’re able to avoid neglecting bills and other obligations. Take it from me—you’re better of not having to deal with the consequences of defaulting.

7. Hunt for the best prices

Make the most of existing price comparison tools when shopping. There are so many easily accessible options, especially when shopping online. Bizrate,, Google Shopping, Shopzilla, and PriceGrabber are just a few I’ve had great experiences with.

Ensure you’re getting the best prices whenever possible for products and services that keep your business chugging along. Hunt for cheaper alternatives to the expensive consumer brands and always be on the lookout for coupons and discounts that can save you a lot of money in the long run.

8. Tame credit card purchases

Not confident of your spending habits? Then avoid paying with a credit card, and use debit or cash instead. Why? Because credit cards can be a bad spender’s enemy number one since it allows for spending without thinking, and before you know it, you’ll be neck-deep in debt. So if it’s an item you don’t really need or can’t afford, resist the urge to reach for your credit card. You’ll be doing yourself a huge favor.

9. Save regularly

If you haven’t done so already, consider opening a business savings account and get into the habit of putting money into it every month. It’s a healthy habit to develop, and nowadays transfers can be easily automated by your bank so funds are moved directly from your checking account into savings.

Unexpected events are always bound to crop up and unanticipated costs are inevitable. A separate savings account will provide you with an added cushion to deal with sudden expenses. Plus, you can earn a little extra money just by keeping cash in the account.

10. Define and understand your risks

Next, acknowledge the fact that every business venture has a certain degree of risk involved, and as a professional freelancer you need to consider your long- and short-term risks to accurately budget and forecast your finances. Common potential risks may include underestimating the market, burglary and theft, loss of reputation or brand value, and product liability. Using your budget as a guide, map out any threats that could affect your business. Once you have a list, you can start implementing emergency planning.

11. Practice makes perfect

Budgeting won’t be easy in the beginning—you will struggle and you will make mistakes. But the important thing is that you keep on practicing so you develop the discipline. Whether it be delaying purchases or getting into the habit of doing regular price comparisons, the more you practice, the more these habits will take root in your life—not to mention, the easier money management will become for you, and the better off you’ll be financially.

RELATED: The Best Ways to Finance Cash Flow Emergencies

About the Author

Post by: Uwe Dreissigacker

Uwe Dreissigacker is the founder of online invoicing software InvoiceBerry, and offers free invoice templates to businesses. Small businesses and sole traders can create, send, and manage their invoices, quotes and credit notes with the tool. In his free time, Uwe travels the world and enjoys experiencing different cultures.

Company: InvoiceBerry
Connect with me on Facebook, Twitter, and LinkedIn.

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