My Bizarre Freelance Budgeting Method – and Why It Gives Me Peace-of-Mind

Many of the questions I field from aspiring (and even established) nurse-writers revolve around the question of money: how to figure out what to pay yourself, how to manage your business budget, and so on.

And, truthfully, I sometimes feel I’m not the best qualified person to answer those types of questions, because… I have a bizarre way of looking at money.

I’ve tried to improve my financial management skills over the years, but I’ve never been able to get to the place where my brain conceptualizes ALL of my funds as a single, big bucket of bucks. Instead, my mind likes to compartmentalize money into categories and timeframes.

Which has led me to develop a (unique?) way of budgeting. But, hey, bizarre though it may be, it certainly works for me – so I thought I’d share it.

I View My Freelance Business Budget as a Month-to-Month Proposition

Let me start by saying I always have viewed my business budget as a month-to-month proposition. When I was first starting out as a freelance nurse writer, I considered it a victory to make enough money to fully fund a single month of my budget. And, hey, that IS a victory! In those first weeks and months of being a business owner, when you’re figuring everything out, landing enough work to pay yourself and fund your business expenses is a true, true victory. You should celebrate it!

As I got more established in my career and managed to land some anchor clients who provided steady work, I was able to have more trust in my ability to fund my budget into the future. This idea gave me great peace-of-mind and led me to begin pre-funding future business months as the cash became available.

Today, for example, as I write this blog post on September 15, I have fully funded my freelance business budget through December. Think about that for a moment. It means I don’t have to worry about paying myself, covering my health insurance premium, or funding my tax bill through the end of the year. And it’s only September!

This takes so much pressure off me. I feel better able to focus on the activities that will drive more revenue – like sending more LOIs – because I’m not feeling stressed about where my next paycheck will be coming from.

The downside of this “model” of money management is that it leaves a lot of cash in my business, where it could theoretically be seized in a lawsuit or something. It also makes it more tempting to dip into those “future funds” for unnecessary purchases today. I mean, sure, I’m disciplined with money…but when I’m eyeing a new computer monitor just because “I deserve it” and know I’ve got $10,000 stashed in my budget for November and December, it can be difficult to keep my hands off that money.

Still, I’ll take those downsides in exchange for the supreme peace-of-mind I get from knowing I can pay myself through the end of the year. That feeling is worth its weight in gold. Pun intended.

My Four Budget “Buckets”

Another thing I do, financially, that may seem little “out there” is that I take the Japanese “kakeibo” approach to managing my budget. Using this method, I established four large “buckets” to hold my business expenses:

Needs (which I label “essential”)
Wants (which I label “optional”)
Culture
Unexpected

Then I categorized my actual business budget line items under these groupings. As an example:

Essential Expenses

Owner drawing
Future taxes
Health insurance premium
Computer hosting

Optional Expenses

Advertising
Association memberships
Office supplies

Culture

Business lunches
Education/conferences
Travel

Unexpected

General savings cushion

Using this type of system helps me respond very rapidly to changes in my business outlook. For example, when I went through a long, dry spell between fall 2018 and spring 2020, I was easily able to temporarily eliminate some Optional and Culture expenses because I had already identified what those were. By stripping my budget down to the Essential Expenses category only, I was able to align my expenses with my revised (lower) gross revenue projections.

I think the kakeibo method also helps me save more money, because I have to really examine whether an expense is a “need” or a “want.”

My budgeting “method” (if you can call it that!) has evolved over the course of years of working on my relationship with money. I think it’s very important for any nurse interested in starting up a freelance writing business to get herself on good terms with financial management – because a dysfunctional relationship with money can wreck your business lickety-split.

And, hey, don’t forget to subscribe to the free weekly newsletter for more great freelance writing discussions like this one!