Been freelancing for about 5 years now and honestly just winging it financially. Some months are great, others not so much.
Starting to think I need an actual plan instead of just hoping the next project comes through. How do you guys handle the unpredictable income thing while still planning for the future?
Keep a cash buffer for those slow times.
Set your rates high enough that you can save during busy periods. I charge enough to cover 3-4 slow months because construction always has dead seasons.
Get a business credit line while cash flow is good. Banks will loan when you don’t need it, not when you do. I keep mine untouched most of the time but it’s there for equipment or materials.
Invoice net 15 and stick to it. Send reminders at 16 days, stop work at 30. Amazing how fast clients find money when the work stops.
Track everything but don’t overcomplicate it. Know what you need monthly and multiply by six. That’s your target for the business account.
Price your services to include taxes and business expenses from day one. I learned this the hard way when tax season hit.
Open a savings account just for taxes. Transfer money there with every payment. Treat it like it’s already gone.
The monthly income swings never fully stop, but you can smooth them out by having contracts with regular clients mixed in with one-off projects.
Don’t chase every lead that comes your way. Focus on clients who pay quickly and treat you well.
Emergency fund helps but diversify your work too. I do regular maintenance contracts plus repair calls.
Three months of expenses saved up changed everything for me. Started putting away 20% from every good month.
The game changer was tracking what I actually spent each month for six months straight. Turns out I needed way less than I thought to keep things running.
Now I have two accounts - one for business expenses and one for the buffer fund. When a big project comes in, the money gets split before I even think about it.
Also learned to say no to clients who take forever to pay. Had one guy who always paid 60 days late. Dropped him and found better clients who actually respect payment terms.
The predictable income thing never really goes away, but having that cushion means you can be pickier about projects instead of taking whatever comes along.