How To Budget When Your Income Is Inconsistent

Brian Hood (0:00)

This is the 6 Figure Creative Podcast, episode 310

Welcome to the 6 Figure Creative Podcast, where our mission is to help you turn your creative passions into a stable, reliable income. If you're in audio, video, design, photography, or really any other creative field, and you just want to learn from other successful creatives, you're in the right place.

I think we can all agree that sometimes freelancing just kind of sucks. We have those Feaster Famine months, and all the time with this podcast, we talk through ways to eliminate the Feaster Famine cycle that freelancers go through.

However, even whenever you have your client acquisition dialed in, you can still have these wild Feaster Famine months. And I remember back midway through my freelancing journey, I had this wild swing from one month to next where I had $20,000 one month and $1,200 the next month. And it's in these famine seasons, whether they last one month or two months or three months, where we can run out of money before the end of the month or before the next big Feast month happens.

And so that brings all sorts of stress on us because we can't cover just basic financial things that we have to cover as freelancers, and not just freelancers, but as humans who own things and live places and have things that we like to do. So we've talked about all the client acquisition stuff that can lead to this Feast or Famine cycle, but tabling that for a second, we need to discuss the mistake that freelancers make on the actual budgeting side, because most freelancers tend to never adjust their budgets based on the ebbs and flows that are naturally going to happen as a freelancer. Like I said, even when you have your client acquisition dialed in nicely, you can still have ebbs and flows. We don't have a salary here. We're not an employee where we just get a flat salary that's easy to budget for. I kind of envy those people to some extent because I know what I'm going to make. I know how to budget for it. And I know if I spend more than that, then I can't make up for it. Whereas a freelancer, it's easy to lie to ourselves sometimes and think, I usually make more than this, so I'm going to make up for myself. I can get that thing that I want this month.

I'll make more money next month, right? So we end up doing either one of two extremes. One is we just set a rigid budget as if we were on a salary, or we just set no budget at all and just try to wing it. And that's like trying to lose weight without counting calories. It's possible. It can be done.

But it's really hard to keep up progress. It's really hard to keep from making those major mistakes where you walk into a cheesecake factory and you have a nice dinner there.

It's cheesecake factory. You got to get a slice of cheesecake. You're not counting calories. You have a slice of cheesecake. You go home, and on a whim, you happen to look up how many calories in a slice of cheesecake at Cheesecake Factory. And then you find out that favorite cheesecake that you just got. It was with the Adam's Peanut Butter Cup Fudge Ripple Cheesecake. This cheesecake is 1,326 calories, and you just undid like a week's worth of work on your body in one slice of cheesecake. We can do the same exact thing in budgeting, where we're not really keeping track of it. We don't want to look at our bank accounts. We don't really want to know what's going on there. It feels bad to look at that stuff. We don't really want to budget. It's a lot of work. It's not fun. It's not creative. I'm a creative. I don't like to do those things.

Eating the proverbial Adam's Peanut Butter Cup Fudge Ripple Cheesecake slice in your business, so to speak. And then all of a sudden, you figure out you've run out of funds.

You're now just going into debt. You're stressed out.

And then the end of the year comes.

This all happens at the worst possible time. It's tax season. And you forgot that you owe in taxes this year because freelancers, we don't get tax refunds. I don't know if you're a freelancer and you get tax refunds. Let me know. I've never gotten a tax refund before. I always owe a lot at the end of the year. And sometimes it's because I just forgot to pay my quarterlies and I have a penalty on top of that. And sometimes it's because I just made more money. That's besides the point here. Either way, you have a big tax bill due because that's just how freelancing is.