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How to organise your finances and budget with ever-changing earnings.

Money – or the lack of it – is not the obstacle to your success and goals but sitting blissfully in the ignorance of your financial health may well be. I can tell you from personal experience that by ignoring your finances and giving sole focus to your artistic pursuits, you could well be damaging them in the long run.

Ultimately, an awareness of your financial wellbeing can help to reduce stress and transform your relationship with money into a positive one.

Understanding your income

Most freelancers have variable income – with a range of different amounts coming in every month. Our relationship with money can be haphazard if we simply spend when we’re earning and tightening our belt when we’re not. This is one of the most common mistakes freelancers make along their career paths.

However, if you take a broader view in knowing and understanding your earnings (your salary) by the end of the year, you can create a budget that gives you the same amount of money to spend every single week.

If you don’t know your end-of-year salary yet, spend some time forecasting what range you think your earnings will fall into.

It’s worth mentioning that certain day jobs offer high hourly rates but low hours, or a nice daily rate with minimal days of work. Sometimes these high rates are diluted by a large amount of time spent commuting or doing prep. When you’re evaluating any day job, consider how much it will ultimately earn you on a monthly or annual basis and whether the reward matches the effort you put in.

Understanding your spending

It’s a little bit more complicated to calculate your outgoings, so I’ve shared this spreadsheet to help you record everything you spend money on and work out how much it will add up to by the end of the year.

Download the budget spreadsheet to get started (Excel document).

The first step is to add all your spending information into the spreadsheet:

  • Column A: Add the item (you’ll see I’ve added some examples so feel free to edit these)
  • Column B: Add the amount the item costs
  • Column C: Add the frequency of payments (‘1’ is an annual payment, ‘12’ a monthly payment and ‘52’ a weekly payment)

Try to write down as much as you can to get the clearest understanding of your outgoings.

A lot of your costs will be fixed, such as your rent and subscriptions – while some of your costs will be flexible, like your food shop and spending money, so adjust these amounts as much as you need.

At the bottom of the spreadsheet, you’ll see a subtotal of all your spending followed by a section which reverse-engineers how much tax and national insurance (NI) you’ll need to pay.

You’ll also see a grand total that represents how much you’ll need to earn at the end of each year, month and week. If your grand total doesn’t match your expected minimum salary, then keep adjusting your flexible spending figures until it does.

In the green cell on the bottom row, add how many weeks of holiday you would like for the year and see how this may change your earnings goal. Typically speaking, people usually take 4-5 weeks off a year. When you adjust this figure, the spreadsheet will calculate what your weekly and monthly earnings should be in order to still reach your annual salary goal.

Future budget goals

There is a second tab on the spreadsheet labelled ‘Your budget goals’. It works in the exact same way as the first tab, but you can use this to play with the numbers and set yourself the kind of spending you would like to have in the future.

You might want to have more spending money, increase your savings or contribute more to your pension. Whatever your financial goal is, put in your desired amounts and it will provide your new aspirational salary goal.

Financial mindfulness doesn’t need to be daunting.  It can help you understand what you can afford to spend every week – without overspending or feeling like you’re torturing yourself by holding back.

With just a small amount of dedicated time, you’ll be able to forecast what you expect to earn and spend, putting you in a stronger position to make decisions about your life and your career.

Fergal Coghlan graduated from Drama Studio London in 2011 and has acted across a range of stage and screen productions. After going through a host of weird and wonderful day jobs to support himself, his predominant day job now is in the corporate role-play sector. Fergal has also produced Off-West End shows since 2013 and is a big advocate of actors creating their own work.

Headshot photograph credit: Ruth Crafer

Photo credit: micheile dot com / Unsplash