5 Best Budgeting Tips for Freelancers in the Philippines

Freelancing was the “professional freedom” that the cubicle-dweller in me fantasized about while working in a 9 to 5. Now that I have managed to earn a living at home while caring for my son, I have also come to realize that the liberation of Freelancing has its price.

Questions like “How do I budget if my income fluctuates every month?” or “What should I do when clients don’t pay on time?” have often filled my mind especially during my first year of Freelancing.

So in this post, allow me to share some of my Best Budgeting Tips for Freelancers as you navigate the labyrinths of your Freelancing journey. Just make sure not to commit the same mistakes I did.

5 Budgeting Tips for Freelancers in the Philippines

1. Get Your Average Monthly Income

“Average monthly income” is typically out of freelancers’ vocabulary simply because it’s impossible to pinpoint how much one earns in a month. Being a freelancer means that what you’ll earn depends on how many gigs you have. Consequently, your number of gigs is conditional on whether clients hire you or not.

Freelancing is fun, but it’s challenging especially if your wallet is hanging on to dear life.

Although an average monthly income is not necessarily applicable to freelancers, there is a way for you to “estimate” your monthly earning potential. Don’t worry, the math is elementary. 

Simply average the sum of your monthly earnings for the past 3 months.

Say, you earned ₱50,000 in January, ₱65,000 in February, and for March you earned ₱35,000. Get the sum of the three values and compute the average. Your average monthly income is then estimated to be ₱50,000.

Knowing your average monthly income is crucial as this figure will determine how you’ll budget your resources. 

2. Keep fixed expenses low until you can upgrade.

The idea here is to keep your fixed expenses as low as you can so when a low-income month comes, you’re not thrown into panic mode. List down your biggest expenses and try to cut off the unnecessary ones.

During my first year, I used to avail the lowest basic internet data promo. Yes, tipid mode muna ako noon! When regular work started pouring in, I confidently upgraded to a better internet promo. I also got my hubby and I insured with quarterly premiums I know I can religiously pay off.

5 Best Budgeting Tips for Freelancers in the Philippines

3. Watch out for delays

We always hear freelancers brag about how much liberty they have compared to company-employed 9-5 hustlers and 24/7 victims of the world’s bureaucratic system. But underneath the prestige of freelance is the subliminal truth (which freelancers usually shush about) that “freedom” goes both ways: 

  • Freelancers have more freedom with time and mobility; but
  • Clients also have the freedom on when they decide to pay the freelancer’s services.

This fact is the double-edged sword that makes freelance more difficult.

Unlike regular employment where salaries are also given on a regular basis, service compensation in freelancing may be delayed. 

Some clients may pay bi-weekly, others prefer it monthly, worse are those that wait until the project is consummated before giving payments — OR NOT, IF YOU GET SCAMMED!

Obviously, this element should weigh in on your budgeting. Your expenses won’t give you a grace period just because your client fails to pay you on time.

4. Tips when Clients don’t pay on time

a. Send your clients an invoice

Last December, I agreed with a client to render my speaking engagement services without realizing that their payment date wasn’t indicated in the MOA I had signed. Up until this day, I have not received the payment.

Some clients just have so much on their plate that they forget to pay for your services. If you don’t remind them, you might suffer the consequences of your timidity.

In freelance, you are free to demand when necessary. Sending out invoices are simply ways to remind your client that your wallet’s gasping for air and you need their payment on the agreed date!

b. Propose payment milestones

Another possibility is discussing payment milestones with clients. Big projects are not new to freelancers, but if you’re working on one, you may opt-out of that post-project payment and propose “payment milestones” instead. Which means just compensation after reaching certain points within the project.

For example, in my case, I usually suggest to companies that they pay me after every webinar I participate in or after every article I write for them.

There’s another company who offered to pay me with two separate payments within two years. Honestly speaking, the long interval has an effect on my productivity with complying with the deliverables. Hence, payment milestones after every deliverable work best for me.

woman having coffee while using laptop

c. Demand an upfront payment

The thing about freelance is that scams can happen if a sketchy client notices your naiveté. The best thing to do is ask for an upfront payment before the project even begins. For example, you can ask for 10% of the project’s total cost.

Consider the upfront payment as earnest money in case your client backs out. Show them samples of your best work or send them links with your name on the by-line to prove your mastery over the task and leverage in the demand.

If you want them to trust you, you have to gain their trust. In the same way, for you to trust them completely, an upfront payment may prove their legitimacy.

5. Establish your Emergency Fund

This is a no-brainer decision. A no-fixed salary entails a fully funded Emergency Fund so you can maintain a roof above your head and continue putting food on the table during lowball-income months.

Here’s a quick guide on how to start your EF:

Final Thoughts

Freelancing can be life-transformative yet challenging. Take it from my experience. It is our lifeblood and our income-generating machine so it is imperative to keep an eye on our budgets.

I’m assuming that by reading this article, you are a Freelancer too or anywhere near that neighborhood. How about you? What are your best tips as a Variable Income Earner? Share them in the comments section below.

5 Best Budgeting Tips for Freelancers in the Philippines

By Ameena Rey-Franc

Recognized as one of the Top Finance Blogs in the PH. Ameena Rey-Franc (founder of TTP) is a former Banker and BS Accountancy graduate turned Blogger, Keynote Speaker, and entrepreneur. Currently an RFP delegate, she is also the Author of a book about Financial Resilience and has held seminars for reputable companies like GrabFoodPH, Pru Life UK, VISA, JPMorgan Chase& Co., Paypal, Fundline, Moneymax, and many more. The Thrifty Pinay's mission is to empower women to LEARN, EARN, and be FINANCIALLY-INDEPENDENT no matter what life stage they are in.