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Last Updated on April 14, 2025
Key Takeaways
- Budget for Your Lowest Income Months: Use an average of your five lowest-earning months to create a reliable, low-stress monthly
budget . - Build a Cash Cushion: Set aside excess income from high-earning months to cover shortfalls during slower periods and maintain financial stability.
- Adopt a Zero-Sum Budgeting Strategy: Allocate every dollar earned to a specific purpose based on the prior month’s income to control spending and plan ahead.
- Review and Adjust Spending Habits: Identify impulse buying or dining out patterns and make intentional changes to reduce unnecessary
expenses . - Explore Self-Employment
Loan Options: If income dips too low, consider reputable lenders that offer loans tailored for freelancers and independent workers.
It is estimated that within the next ten years, 50 percent of American workers will be freelancers.
Advancements in technology have made the growing popularity of freelance work possible. We can complete the same kind of work from home or at a coffee shop as in an office setting.
This type of flexibility is desirable for most people because they can work on their own schedule and from anywhere. But working as a freelancer has its downsides, too.
Freelance workers have a more variable income due to inconsistent availability or working different monthly hours. This can make creating a stable budget difficult, especially if one’s income changes drastically from month to month.
This setback means that freelancers need to
You Need A Budget’s proven method that has helped hundreds of thousands of people break the paycheck to paycheck cycle, get out of debt, and live the life they want to live.
Look at How Much You’ve Made in Previous Months
While your income is variable, you can gather enough information to create a general outlook on your monthly income. Take a look at your
What was the most you made in a month? What was the least you made? Now take the average income amount of the last two years.
The best route is to create a strict
Your
DESIGNED FOR PERSONAL CASH BUDGET - Save time and energy with our color coded cash envelopes, at 7x3" specifically designed for use as a cash budgeting system.
Create a Cash Cushion
Freelance work can be extremely generous, or you could be starved for work for a couple of months. That’s why planning and creating a cash cushion that you can dip into under challenging months is essential.
We talked about creating a
Some of that money should go towards a cash cushion. A cash cushion is extra money in your checking or
Consider Zero-Sum Budgeting
A zero-sum
To have a zero-sum
This strategy allows you to maximize each month’s income. You won’t spend more than you made the previous month, and you can adjust your spending based on your income last month.
This clear and simple guide provides tons of practical advice for keeping track of your finances. With useful tips on setting financial goals, reducing debt, finding ways to save money, and creating and following a budget plan, you’ll have your dollars and cents under control in no time.
Look at Your Spending Habits
Everyone should examine their spending habits when making a
You may be able to get away with reckless spending during months when you have a ton of work, but you’ll end up kicking yourself for not putting that extra money into your cash cushion during the slower months.
So, take a close look at your monthly credit card bills. Where is most of your optional spending coming from? Do you eat out three times a week? Do you see that you make late-night impulse purchases on Amazon?
If you have a problem with eating out too often, try reducing your outings to once a week. Eating at home instead of going to a restaurant can save you hundreds of dollars a month.
If you make impulse purchases late at night, this may be due to decision fatigue. This means we have less control over our decisions at night and are more likely to act impulsively.
If this sounds like you, make a rule to wait until the following day to make a purchase and see if you need it.
By questioning whether or not we need to spend money on something, we can reduce reckless spending and save a ton of money each month, which can go towards your cash cushion!
“Many people are giving up working for an employer altogether, and are working for themselves on a
freelance basis. There are many advantages to this, including the possibility of flexible hours and control over what clients you choose to work with, and getting out of what could be a hostile work environment.”
Earn 60,000 bonus points after you spend $4,000 on purchases in the
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Know Your Self-Employment Loan Options
Freelancers can find themselves in a financial pickle just like anyone else. If this happens to you and you don’t have the cash cushion you need to pay for
Companies like Bonsai Finance offer loans for self-employed and
Make the Most of Your Variable Income
Being a
Looking to set your own hours or make some extra cash? Take a look at our side hustle partners.
Next Steps
- Analyze Your Income Trends: Review the past 12–24 months of
freelance income to identify your highest and lowest-earning months for more accuratebudget planning. - Create a Low-Income Baseline
Budget : To avoid financial stress during lean periods, base your coreexpenses on the average of your five lowest-earning months. - Build a Cash Reserve: Allocate surplus income during high-earning months to a dedicated cash cushion account for future income gaps or emergencies.
- Try a Zero-Sum
Budget : Use the previous month’s income to plan every dollar of spending for the current month, reducing waste and improving control. - Evaluate Your Spending Habits: Track and adjust discretionary
expenses , such as dining out or impulse shopping, to stay aligned with your financial goals.
Final Words
Freelance work offers unmatched freedom but demands discipline and financial foresight. By building smart budgeting habits and preparing for income variability, you’ll reduce stress and take full advantage of
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Mark Fiebert is a former finance executive who hired and managed dozens of professionals during his 30-plus-year career. He now shares expert job search, resume, and career advice on CareerAlley.com.
