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Budgeting 101: What Every Freelancer Needs to Know

Budgeting is only for those freelancers who are just starting out and are still trying to establish a steady supply of clients and projects, right? Wrong! Budgeting is useful for any freelancer, at any time. You can’t market your language services if you don’t have a marketing budget. In addition, it is impossible to anticipate every situation that may occur, and when it does, you will need the extra financial resources you never planned on using.

People don’t often like to think about budgeting, because it can feel restrictive. However, budgets are necessary for making sure you have enough money to pay your rent and utilities and for putting food on the table. You have to know where your money’s coming from and where it’s going.

For freelance linguists, however, a budget for their freelance work is even more important than for someone in traditional employment. Since freelance work is understood to be unpredictable, uncertain, and ever-changing, it is important to have a financial cushion for those times when the work is not as plentiful. This doesn’t mean that freelance work is never lucrative, but it means that the wise freelancer plans ahead.

For workers in traditional employment, only the take-home budget is considered. This is because employers and freelancers both have to consider the issue of overhead and general operating costs for a business. As an example, if a freelance translator works from home, although the electric bill may not cost anymore, what about the hosting service for your website? What about the second phone line your clients use to contact you? What about the money needed to make up business cards? And what happens if your printer goes out? As someone in business, you can’t just walk down the street to the library and use theirs.

So how do you go about making a freelance budget? First, you need to separate your personal expenses from your business expenses. A highly-recommended first step is to open a second checking and savings account in the name of your business. This will allow you to keep your business expenses completely separate, and when you need to buy a new printer or add a fax line, you can use your business savings to make the purchase.

Next, using financial management software like Quicken to keep track of your business expenses and estimate tax withholdings is highly recommended. You could create a simple spreadsheet in Excel, but depending on how complex the data becomes or how organized you want to be, you may find that using dedicated software which allows you to import your bank statements, automatically categorize transactions, and view cash flow information all in one place works best.

Above all, recommendations for maintaining a freelance budget are as follows:

  • Keep them separate – Separate your business and personal expenses so you always know what’s what
  • Stay organized – Know what’s coming in, what’s going out, and what you will have left
  • Savings – Put a dedicated amount into business savings each month
  • Salary – Give yourself a salary so you know how much you will earn each pay period to cover your personal expenses and have a little left over

It is also often recommended that when you first start out doing freelance work that you have a second source of income for the first year in order to save a sufficient amount of money to get your business off the ground and establish yourself and grow your client list.

Do you have any tips for prospective translators or interpreters who may wish to start keeping a budget? Have you found one recommendation works better for you than another? Let us know in the comments!

Nisar_Nikzad

NISAR NIKZAD

Nisar, the dynamic force behind Translation Excellence, stands tall as its founder and CEO. This isn’t just any company—it’s a global heavyweight in boutique language services. Hailing from the vibrant city of Kabul, Afghanistan, Nisar brought his passion and expertise to the U.S. shores in 2001. In the realm of languages, he’s a titan. With 19 years under his belt, he’s worn hats from a linguist and instructor to a cultural bridge-builder and curriculum craftsman.

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