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Financial planning and budgeting should be wonderful ideas. However, it could get really difficult if we don’t accurately know the monthly payment. It is important to consider the amount of money that we should earn. For freelancers, there are months that they hardly earn any money, while during productive months, we could get enough income for multiple months at once. From financial planning point of view, this is a challenging situation. Regardless, we should make sure that we can deliver proper stability to our finances. Fortunately, the first step to plan our finances is not determining our income, but to find out how much our lifestyle actually cost us. Chances are, we should be able to determine how much we should spend for a specific month.
We should add up our expenses, including health insurance, car-related expenses, utilities, mortgage payments or rent, food, education and others. It is also important to make a list of periodic payments, such as car registrations and license renewals. If possible, we should also include the amount of money that we spend to purchase a gum, if we do this often enough. We can implement a good exercise by carrying the proper notepad, so we are able to keep track of all expenses. Although we have a strict budget, we should also have some amount of entertainment, so we need to include the cost. In fact, by having a strict budget, we could make sure that we could steadily enjoy good entertainment with the whole family.
It may take two months or more to accurately determine what it should cost us. There should be clear categories that we need to consider such as monthly, weekly and daily expenses. The amount of money that we need to spend each month should be allocated to the proper accounts. We will feel much better, if we know that there’s enough money stashed away at specific areas for different expenses. This will provide us with good stability, especially because freelancers may not be able to steadily earn enough money for specific purposes. Freelancers should be aware that impulse buys could leave them eating rice and beans for a week or more. Because we can’t be sure whether we will still earn enough money next month, it is important not to use next month’s allocation this month.
The conventional wisdom is to avoid using credit card debts, if it is not necessary. It is better to use our debit cards; instead of our credit cards. Interest rate for such a loan can be excessively high and this will add further pressure to our relatively unstable financial condition. That’s why by incorporating additional elements that can stabilize our finances should be able to calm our nerves. We should stop charging on our credit cards, unless during emergencies. Routine expenses, such as utilities, groceries and education shouldn’t be charged from credit cards. Unless we are travelling far from home, it is better to leave our credit cards at home.