freelance budget
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By 8.6 min readLast Updated: 21. March 2024

Guide: How to set an effective budget as a freelancer

Why can it as freelancer be an advantage to lay down a budget? And how do you do it best?

There are many benefits of working as a freelancer: freedom to create your ideal working life, to be able to choose the projects and customers, which you yourself want to work with and much more.

But as with everything else in life, there can also be challenges to life as a freelancer. For most freelancers, an unstable income, or lack thereof, can be associated with great frustration or fear.

Why should you set a budget as a freelancer?

As self employed freelancer, there may be months when the income is stable. In addition, months when it is more fluctuating or at worst absent.

Life as an independent worker is not always predictable and can be something of a roller coaster ride.

It doesn't matter, though, as long as you remember to factor it in so you're prepared for unforeseen expenses and dry months.

Create a thorough overview

As a freelancer, it can therefore be a particularly good idea to give you an overview by setting a realistic budget.

A budget that also separates your personal finances from the company's.

Security, peace of mind and financial stability are therefore some of the main reasons why as a freelancer you should have control over the budget.

Read along below to find out how you can get started with setting your freelancer budget.

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An easier freelance life with Factofly

Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 9,000 others with an everyday life without administration.

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Budget as a freelancer: Income and expenses

When you start setting up your freelance budget, it is first and foremost important to create an overview of income and expenses.

The goal is to make sure it all fits together.

You can therefore start by making a list of your expected expenses, which you can divide into two: variable & fixed expenses.

There are plenty of them free budget templates, who can help you from land here.

Fixed expenses that a freelancer typically has can be:
  • Rent of office space
  • Telephone and internet
  • insurances
  • Auditor/administration
  • Business account
  • Accounting program
Variable expenses that a freelancer typically has can be:
  • Transport/travel
  • Equipment, programs, work tools
  • Marketing

The variable expenses are of course more unpredictable, which is why you should include them in the budget. How much do you calculate approx. with having to spend on variable expenses in the future?

Your income as a freelancer

When it comes to income as a freelancer, this can also be more unpredictable.

A good idea might be to make an overview of your current projects to calculate an approx. income.

You can also use the incomes of recent months as a starting point to find an average income per month. month - if, of course, you expect to continue business as usual.

Setting income goals as a freelancer

You can also turn the bucket upside down and use a budget to set new goals.

Once you have an overview of your business budget, you will know what salary is left for yourself.

You will be better able to see how much you need to earn to meet the budget and keep your freelance business running.

What do you want or need to earn?

After all, the most important thing is that your business makes a profit and that you can live the life you want.

Your budget can therefore be used to set new income targets, as motivation to find more customers – when you have the overview, it creates clarity and clear targets to work towards.

It may also be that along the way you find expenses that you can advantageously cut down on, and then adjust your income targets accordingly.

create free user

An easier freelance life with Factofly

Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 9,000 others with an everyday life without administration.

create free user

A freelance budget; establishment, operating and liquidity budget

To create the best overview of your business finances, you can choose to divide your budget into three.

That means getting one made, respectively establishment, operating and a liquidity budget.

Virksomhedsguiden.dk has several templates and budget templates available to you free of charge, which makes budgeting manageable.

A budget can be set for 1 month, 3 months, half a year ahead, or any time period you want.

In order to create as much stability as possible, it is recommended to set a long-term budget. It can, for example, be for half or a full year, where you can continuously adjust the budget.

Establishment budget

An establishment budget is most relevant for you who want to starting as a freelancer. The establishment budget gives you an overview of how much it will cost you to start your freelance business, so you get off to a good start.

Fortunately, there are usually not many expenses associated with starting a sole proprietorship.

However, there are some establishment costs that you should include:
  • Establishing a business account
  • Subscription to accounting software
  • Equipment to be acquired at the start (e.g. computer, camera, etc.)
  • Office furniture
  • Counseling
  • Marketing

With a establishment budget you can secure an overview of how much money you need to get your business off to a good start.

Operating budget

One operating budget provides an overview of the expenses and income you expect to have as a freelancer.

In the operating budget, you must define your revenue and enter the fixed and variable expenses, which we mentioned in the previous section.

It allows you to predict how your business will fare and whether your business will make a profit.

Every month you can compare your operating budget with your actual accounts, so that your operating budget is always set realistically.

Liquidity budget

About one the liquidity budget is necessary for you depends somewhat on the type of business you run.

A liquidity budget tells you whether your company has enough money in the bank to pay the bills that may come up.

Overview of payments

It will also give you an overview of when the various deposits and withdrawals must be made.

Therefore, this type of budget is most relevant if you have more or larger expenses that you want to make sure are paid on time.

If your business is very simple and you already feel that the operating budget itself has given you a thorough overview, you can simply disregard a liquidity budget.

This type of budget will also contribute to a greater overview of your payment of tax and VAT in your independent freelance business.

create free user

An easier freelance life with Factofly

Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 9,000 others with an everyday life without administration.

create free user

Tips for managing a fluctuating income

Once you have set your budget, it will give you a sense of what you can roughly expect to earn as a freelancer in the coming year. 

But as an independent freelancer, as I said, the income can be fluctuating, and therefore the budget is just an auxiliary tool.

Create an 'emergency fund' as a freelancer

It may therefore be appropriate to set up a so-called "emergency fund", i.e. a savings for emergency situations or a buffer.

You can use it if your turnover dips or if an unforeseen expense comes up.

Your buffer also gives you security in the months when the income is small or if there are challenges with payers – that way you can always sleep soundly at night!

Put your eggs in several baskets – spread your risk

You can also protect yourself by diversifying your sources of income. This means spreading your risk and making sure your income comes from multiple sources.

It can, for example, be that you have several smaller projects that pay you, rather than e.g. two major projects that contribute to your entire earnings. If one of these two projects were to shut down, in such a case you would lose half of your income.

If, on the other hand, you have several smaller customers, your income will not fluctuate as much if a customer chooses to stop the collaboration.

If you experience poor payers in your business, it can be beneficial to secure your income by requiring a deposit for your work before commencing. In this way, you are guaranteed part of the amount if your customer skips or does not want to pay.

Alternative sources of income

It may also be that you find several small sources of income for your business, which can help stabilize your finances better. It can, for example, be the sale of online products, courses or anything else that relates to your freelance work.

Get started with your budget as a freelancer

Setting a budget as a freelancer can seem like a boring and unmanageable task. So is that budget really that important?

Yes! If you want to secure your business financially and create stability, a budget is the ultimate tool. Creating a budget as a freelancer is essential.

It creates an overview, the possibility of greater financial freedom and most importantly – greater financial security.

When you have a well-thought-out budget with realistic calculations and an 'emergency fund', you can be more calm in relation to your finances.

create free user

An easier freelance life with Factofly

Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 9,000 others with an everyday life without administration.

create free user
freelance budget
By 8.6 min readLast Updated: 21. March 2024

Guide: How to set an effective budget as a freelancer

Why can it as freelancer be an advantage to lay down a budget? And how do you do it best?

There are many benefits of working as a freelancer: freedom to create your ideal working life, to be able to choose the projects and customers, which you yourself want to work with and much more.

But as with everything else in life, there can also be challenges to life as a freelancer. For most freelancers, an unstable income, or lack thereof, can be associated with great frustration or fear.

Why should you set a budget as a freelancer?

As self employed freelancer, there may be months when the income is stable. In addition, months when it is more fluctuating or at worst absent.

Life as an independent worker is not always predictable and can be something of a roller coaster ride.

It doesn't matter, though, as long as you remember to factor it in so you're prepared for unforeseen expenses and dry months.

Create a thorough overview

As a freelancer, it can therefore be a particularly good idea to give you an overview by setting a realistic budget.

A budget that also separates your personal finances from the company's.

Security, peace of mind and financial stability are therefore some of the main reasons why as a freelancer you should have control over the budget.

Read along below to find out how you can get started with setting your freelancer budget.

create free user

An easier freelance life with Factofly

Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 9,000 others with an everyday life without administration.

create free user

Budget as a freelancer: Income and expenses

When you start setting up your freelance budget, it is first and foremost important to create an overview of income and expenses.

The goal is to make sure it all fits together.

You can therefore start by making a list of your expected expenses, which you can divide into two: variable & fixed expenses.

There are plenty of them free budget templates, who can help you from land here.

Fixed expenses that a freelancer typically has can be:
  • Rent of office space
  • Telephone and internet
  • insurances
  • Auditor/administration
  • Business account
  • Accounting program
Variable expenses that a freelancer typically has can be:
  • Transport/travel
  • Equipment, programs, work tools
  • Marketing

The variable expenses are of course more unpredictable, which is why you should include them in the budget. How much do you calculate approx. with having to spend on variable expenses in the future?

Your income as a freelancer

When it comes to income as a freelancer, this can also be more unpredictable.

A good idea might be to make an overview of your current projects to calculate an approx. income.

You can also use the incomes of recent months as a starting point to find an average income per month. month - if, of course, you expect to continue business as usual.

Setting income goals as a freelancer

You can also turn the bucket upside down and use a budget to set new goals.

Once you have an overview of your business budget, you will know what salary is left for yourself.

You will be better able to see how much you need to earn to meet the budget and keep your freelance business running.

What do you want or need to earn?

After all, the most important thing is that your business makes a profit and that you can live the life you want.

Your budget can therefore be used to set new income targets, as motivation to find more customers – when you have the overview, it creates clarity and clear targets to work towards.

It may also be that along the way you find expenses that you can advantageously cut down on, and then adjust your income targets accordingly.

create free user

An easier freelance life with Factofly

Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 9,000 others with an everyday life without administration.

create free user

A freelance budget; establishment, operating and liquidity budget

To create the best overview of your business finances, you can choose to divide your budget into three.

That means getting one made, respectively establishment, operating and a liquidity budget.

Virksomhedsguiden.dk has several templates and budget templates available to you free of charge, which makes budgeting manageable.

A budget can be set for 1 month, 3 months, half a year ahead, or any time period you want.

In order to create as much stability as possible, it is recommended to set a long-term budget. It can, for example, be for half or a full year, where you can continuously adjust the budget.

Establishment budget

An establishment budget is most relevant for you who want to starting as a freelancer. The establishment budget gives you an overview of how much it will cost you to start your freelance business, so you get off to a good start.

Fortunately, there are usually not many expenses associated with starting a sole proprietorship.

However, there are some establishment costs that you should include:
  • Establishing a business account
  • Subscription to accounting software
  • Equipment to be acquired at the start (e.g. computer, camera, etc.)
  • Office furniture
  • Counseling
  • Marketing

With a establishment budget you can secure an overview of how much money you need to get your business off to a good start.

Operating budget

One operating budget provides an overview of the expenses and income you expect to have as a freelancer.

In the operating budget, you must define your revenue and enter the fixed and variable expenses, which we mentioned in the previous section.

It allows you to predict how your business will fare and whether your business will make a profit.

Every month you can compare your operating budget with your actual accounts, so that your operating budget is always set realistically.

Liquidity budget

About one the liquidity budget is necessary for you depends somewhat on the type of business you run.

A liquidity budget tells you whether your company has enough money in the bank to pay the bills that may come up.

Overview of payments

It will also give you an overview of when the various deposits and withdrawals must be made.

Therefore, this type of budget is most relevant if you have more or larger expenses that you want to make sure are paid on time.

If your business is very simple and you already feel that the operating budget itself has given you a thorough overview, you can simply disregard a liquidity budget.

This type of budget will also contribute to a greater overview of your payment of tax and VAT in your independent freelance business.

create free user

An easier freelance life with Factofly

Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 9,000 others with an everyday life without administration.

create free user

Tips for managing a fluctuating income

Once you have set your budget, it will give you a sense of what you can roughly expect to earn as a freelancer in the coming year. 

But as an independent freelancer, as I said, the income can be fluctuating, and therefore the budget is just an auxiliary tool.

Create an 'emergency fund' as a freelancer

It may therefore be appropriate to set up a so-called "emergency fund", i.e. a savings for emergency situations or a buffer.

You can use it if your turnover dips or if an unforeseen expense comes up.

Your buffer also gives you security in the months when the income is small or if there are challenges with payers – that way you can always sleep soundly at night!

Put your eggs in several baskets – spread your risk

You can also protect yourself by diversifying your sources of income. This means spreading your risk and making sure your income comes from multiple sources.

It can, for example, be that you have several smaller projects that pay you, rather than e.g. two major projects that contribute to your entire earnings. If one of these two projects were to shut down, in such a case you would lose half of your income.

If, on the other hand, you have several smaller customers, your income will not fluctuate as much if a customer chooses to stop the collaboration.

If you experience poor payers in your business, it can be beneficial to secure your income by requiring a deposit for your work before commencing. In this way, you are guaranteed part of the amount if your customer skips or does not want to pay.

Alternative sources of income

It may also be that you find several small sources of income for your business, which can help stabilize your finances better. It can, for example, be the sale of online products, courses or anything else that relates to your freelance work.

Get started with your budget as a freelancer

Setting a budget as a freelancer can seem like a boring and unmanageable task. So is that budget really that important?

Yes! If you want to secure your business financially and create stability, a budget is the ultimate tool. Creating a budget as a freelancer is essential.

It creates an overview, the possibility of greater financial freedom and most importantly – greater financial security.

When you have a well-thought-out budget with realistic calculations and an 'emergency fund', you can be more calm in relation to your finances.

create free user

An easier freelance life with Factofly

Be a freelancer without hassle and get paid without your own CVR number with Factofly. We help almost 9,000 others with an everyday life without administration.

create free user