Budgeting with irregular income: Guide for freelancers
💡 Quick Tip
Discover how to manage personal finances when you don't know what you will earn next month. Learn to calculate your base income, create a budget proof against slow months, and build a vital financial cushion.
The financial rollercoaster
For freelancers, the biggest enemy is uncertainty. One month you earn €3,000, the next €600. A traditional fixed-income budget fails; you need a system that absorbs shocks.
Step 1: Find your "Base Salary"
Calculate your Survival Minimum: the sum of all essential fixed and variable expenses (rent, food, taxes). Then, find your average monthly income from the last year. If your average is higher than your survival minimum, that minimum becomes the "base salary" you pay yourself monthly.
Step 2: The two-account rule
Separate business and personal money:
- Income Account (Business): All client payments go here.
- Personal Account: Your rent and food are paid from here.
On the 1st of every month, transfer your "Base Salary" from the business to the personal account. Even if you billed double, only pay yourself the base salary.
Step 3: What to do in good months
When the business account fills up, don't inflate your lifestyle. Extra money stays there, building a Stability Cushion covering 3 to 6 months of your Base Salary. During a zero-income month, you still transfer your normal salary from that cushion.
📊 Practical Example
Practical example with real numbers
You are a freelancer. Your Survival Minimum (base salary) is €1,200 a month.
- Month 1 (Good): You bill €2,500. It goes into the Business Account. You transfer €1,200 to your Personal Account to live. €1,300 remains in the business cushion.
- Month 2 (Bad): You bill only €400. Don't panic. You have €1,300 saved from last month. You transfer your usual €1,200 to your Personal Account (taking the missing €800 from the cushion).
Your personal life felt no crisis. You keep paying rent and food smoothly because you didn't blow the good month's income. That is true freelancer peace of mind.
