Congratulations! If you’ve made it this far, you’ve started earning income as a freelance writer.

Now what?

If you’ve received paychecks for more than 30 days, you’ve probably noticed that the bottom line is not the same every month. In fact, it might feel a bit like feast or famine. One week you’re scrambling to keep up with all the writing assignments. The next, you can hear crickets in your inbox.

How are you supposed to function on such a variable income?

By living on a variable budget.

So…what does that look like?

It probably looks slightly different for each person, but I’ll give you the run-down of the Nenn Pen, Ink version, and you can take it from there. Following is the method my husband and I use for budgeting with an income that changes each month. Make whatever adjustments you need to make it work for you.

1. Create Your Budget

Literally, write or type out a budget on a piece of paper (or in an app if ya wanna get all fancy). If you’ll be working on the budget with a spouse, a printed version can be easier to look at and make notes on together.

At the top of the page, list your income for the month. Add up everything you earned to create a grand total (after taxes). This is your net income or take-home pay.

Subtract 10% for your tithe.

The remaining funds are what you must allocate to your various expenses for the month. As Dave Ramsey would say, you’re giving every dollar a name. I say, you’re telling it where to go.

To work with my fluctuating income, my husband and I have broken down our budget into three main categories. My husband, (the talented financial whiz who devised our budget) even color-coded these tiers.

Tier 1: Needs

Tier 2: Wants 

Tier 3: Wishes 

Under the needs category, list all your essentials. These are the bills that you must pay to survive. Most of them cost you nearly the same amount every month. They might include mortgage payments/rent, utilities, groceries/supplies, transportation, and communications. (The most variable item here is groceries, since you can choose steak or Ramen each night, but the fact is that you have to eat something, so it goes in this “tier one” category.)

The second tier includes items that you don’t need to survive…but life is better with them in it. Here is where we list items like AAA membership fees, life insurance premiums and haircuts. The biggest variable in this tier is “Mad Money.” No, it’s not angry. Some call it “fun money.” Others call it their entertainment budget. It’s the amount you allow yourself to spend on apple turnovers from Arby’s and overpriced popcorn at AMC. Since this amount is pretty much entirely up to you, you can easily make this line-item realistic for your income.

The final tier includes all your dreams that you dare to dream. It’s basically a breakdown of things you want to save for in the future. Once you’ve allocated dollars to fulfill all the items in tiers one and two, you put the leftovers here. This includes long-term savings for retirement as well as short-term savings for the grill you want to buy this summer. Our categories cover things like retirement, vacation, cars (for repairs and eventual replacement), house (decorations and remodeling), gifts (a benevolence fund for b-days and opportunities for generosity), and Christmas.

Important Note: If you are in debt (other than your mortgage), you probably shouldn’t have a tier 3 yet. Anything left over after your essentials should get thrown at your debt. We used the debt snowball method to get rid of our car payments and student loan debt. (I don’t recommend taking on either of those debts to begin with, by the way.)

2. Stick to Your Budget

This may seem obvious, but many don’t do it. Devise a system that will help you stick to the spending amounts you’ve indicated on your budget.

Some find cash envelope systems helpful. (Once you spend all the cash from your “grocery” envelope for the month, you’re done buying groceries!) We don’t like to carry cash, so we use an app (shocker, I know – coming from the anti-tech gal). We record each trip to the store in the grocery category, every restaurant meal in the Mad Money category, and so on. We use parts of the Every Dollar app, but I’m sure there are others. Pen and paper work, too.

The goal of your system is to remain aware of how much you are spending and know when you reach the limit. When you do, STOP spending. If there’s nothing left in the Mad Money category, don’t go bowling or order a latte. You’re done with these things until next month. Got it?

3. Review and Renew Your Budget

At the end of every month, sit down with your budget and repeat the process. Write down your actual spending next to the amount you planned to spend in each category. Hopefully the numbers match. (If you did really well, your actual spending will be less than the budgeted number!)

If necessary, make changes for the next month’s budget. Add new line items (such as new “wishes”) or remove old ones (such as debt you paid off – yeah!) Maybe you need to change the rent line-item because your landlord wants more money (sad), or change the insurance line-item because your premium went down (happy).

Again, when you complete tiers one and two, if there is anything left over, decide where you want to put it.

Remember, this “leftover” is what makes your budget variable. By working through tiers one and two, you’ve stabilized your budget to create a fairly steady or predictable system from a somewhat unpredictable income. As your pay changes each month, you’ll have more or less to put into the third tier. Allocate portions of this leftover amount to various categories in tier three until you have zero dollars left. (If it was a slow month in the writing biz, this part of the budgeting won’t take very long!)


Is all that as clear as mud? Perhaps a visual will help. Here’s the budget form we use each month. (Minus all our personal stuff, since you don’t really need to know how much we fork over to AT&T and Xfinity.) Your specific categories will obviously vary from ours, but this will give you a general idea of where to start.

The figures in parentheses are the same each month. They represent what you expect to spend in that category (tiers one and two), or what you hope to save for that category (tier 3).

Tip #1: For your utilities, use an average amount based on bills from the past year.

Tip #2: For bills you pay once each year, include 1/12 of the amount in each monthly budget. These fraction amounts will stay in your checking account until the bill is due, then the funds will be there to pay the full amount.

Tip #3: If you’re having trouble covering tier one, it’s time to go back to puttin’ on the blitz to start earning more money. You may also need to make adjustments in the categories which you can control – like Mad Money.

If you have any questions, suggestions, or simply want to vent to a fellow freelancer about your budgeting frustrations, feel free to comment below or get in touch.

Need more help getting organized as the workflow picks up? Watch for the next post:


One comment

  • Well written and explained, Kerry. So great that you shared your budget process as a template. I’m sure it will be a great starting point for new writers. I would have included in the sample a Tier 3 for debt repayment and made Tier 4 for savings. You have this in your narrative, but some will find more clarity in the example. I would have also added a line in Tier 1 for emergency fund. It is just as important in a variable budget. Once you have an adequate emergency fund, the budget amount will be 0. Thank you for your continued work on this project, a very generous way for you to share what you have learned through your own efforts.

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