Save. Spend. Splurge.

Budgeting like a freelancer: Set yearly amounts and save the rest

So this year, I decided that I needed to start budgeting like a freelancer, rather than someone with a steady income.

Most people tend to look at their net income each month, set a budget based on that (rent, groceries, savings, debt repayment), and budget to have $0 left unaccounted for.

So if they make $2000 a month, they can spend about $700 on housing (35%).

My income as a freelancer, spikes and then drops to $0, as evidenced below in my net worth from 2006 until the end of 2012 with all of the spikes then slow drops.

(Click to biggify)


Now, I’d like to set a budget for living reasonably, disregarding what I actually make as an income, and then save all the rest of my income.

The slight twist is that I now look at the yearly totals each month rather than monthly totals, which is something I’ve heard a few people mention.

This makes more sense because my income is not monthly, and I’ve been ad hoc budgeting like this for a while now, without realizing it.

I’ve just been giving myself an allowance each month!


I had originally written the post: What is an ideal household budget? a while back (sometime in October I believe), and set it to $40,000, based on the fact that I grossed about $70,000 a year (2 years working, 3 were relaxing..).

Between October and now, I’ve decided that $30,000 net is my new budget for spending rather than around $33,000.

It’s easier than thinking of in gross dollars, and I spend in net dollars anyway.

(I also say net because it’s after any kind of taxes, give or take a few thousand ($3000 or so).)

Every year, I seem to come up with a budget for the next year, based on how I’ve been spending in the last 2 years, and trying to account for what caused my outrageous spending in categories like Wardrobe or Fees in 2012 for example (think: lawyers of all kinds, in all shapes and sizes, who then send you holiday greeting cards and tell you how much they loved your business!!..).

It never works out perfectly, but in general with the exception of last year *cough*2012*cough*……I have been spending less than ~$33,000 net per year or $40,000 gross, which isn’t so bad.

Therefore I now think of my budget as what I feel are reasonable expenses for my current situation and preference for living, which does not include:

  • living in a cheap cardboard box with paper thin walls with noisy & smelly neighbours
  • wearing a neutral uniform of the same type of clothing to match all the other minimalists
  • refusing to travel or buy something shiny (within reason) because my heart desires it
  • eating as cheaply as possible to save money — it is NOT my thing, y’all, I just can’t do it
  • pinching pennies by making my own toilet paper — err.. has any uber frugal-er done this yet?
  • savings — that will be assumed as ‘all the rest of my income’ after spending

You get the idea.


As mentioned in my earlier post, I can always get $40,000 gross at the very minimum as a job enough to survive a year until I get something better.

And by survive, I mean pay for my current, comfortable lifestyle, but to save $0 for the year (not a viable long-term option).


This is a very conservative assumption for me, and I plan on keeping it like that.

In actuality, I can get a job at $90,000 – $130,000 gross working for a company, but I don’t like those kinds of numbers when I think of spending.

I’d rather think of that as a bonus if I make that kind of money.

I like those numbers when I think of SAVING all of that, if I gave myself an ideal budget to follow.

Spending that makes my impulse nerve twitch, then I want pretty things, and it snowballs into me crying in the corner, clutching my receipts and feeling overwhelming waves of guilt at spending.

$40,000 gross looks like this after taxes in Canadia*:

*misspelling as a joke for Americans.. 😉

For thy viewing convenience, I’ve highlighted the only 2 provinces and territories I actually work in.

  • Ontario gives me $34,038 net
  • Quebec gives me $32,131 net

This does not include any tax breaks from charitable donations or fully funding my retirement funds, which lowers my taxable income as well.

It also has a few thousand more than my $30,000 budget, because I like having a cushion for spending.

As a freelancer, I do have a few perks in terms of being able to write off some expenses related to my business (which is my brain), and this usually helps a little in terms of having more to spend.


As mentioned before, my previous ideal budget (before I wrote this post), was just about the same amount of money — $33,000 net spending instead of $30,000 net, but I’ve since changed and tweaked it a bit.

I am feeling this estimated budget for 2013 which is a nice $30,000 net.

Click to biggify


I really will try and look at it from a yearly point of view, and I’ve pored over every number to see if I could make it, and if it sounds realistic considering how I want to live.

If I spend all my money early on, that means I have $0 left for the rest of the year.

*already feels imprisoned a little…*

At the end of the day, I think I’d rather put more money towards Travel rather than Wardrobe, and it’ll be a personal challenge for me to spend less than that on Wardrobe and put the money into investing instead.

Wardrobe will include not only buying things, but also having them fixed or tailored.

You will also notice that I don’t stick to prescribed PF budget percentages.

  • Read: The Ideal Household Budget for Spending

Transportation is not a big thing for me. 5% is more than enough, I don’t need 15%.

I also don’t have Debt in there (‘cuz I have none), and no specific Savings category because I save what I don’t spend.

(Most PF’ers will tell you to save FIRST, then spend. I go the other way around.)

Under Housing, I spend a LOT but that’s to be expected, living in a hotel. We don’t want to take a lease for a year (the only kind available in Canada), and that’s that.

The rest of my budget goes to Living around 50%, but that’s because I pilfered from Transportation, Debt and Savings.

Savings are a given for me. They’re above and beyond the $30,000 budget I give myself to live on.

My savings have to be at least $36,000 a year ($24,000 if I’m really pushed for a minimum).

So in reality, I’d need to be making at least about $66,000 a year (net) to live like this, where I am able to save more than half of my net income which is perfectly in line with how much I can make per year if I took a Jane Job at a $90,000 gross income (my lower income salary number).

The reason why I’ve been making $75,000 gross instead of $90,000 gross is I’ve been working 2 out of the 5 years of my career, rather than 100% of the time.

I saw it as a good deal — almost the same amount of salary, for less than half the hours spent.

I am hoping this year will be a full year of working, and I’mma about to hustle for those jobs.


Well those are averages per month, as contingencies mostly.

$120/year for electronics should be more than enough, even if it sounds like too much or too little to you.

This is just for personal electronics, because I know things like cables get broken/lost/stolen, and I want to be sure that I have a contingency in place just in case.

Why put $0 when I know it probably won’t stay at $0?

Why put $2000 when I know it won’t be $2000 for personal electronics?

All I’m even eying is a Kobo Glo as we speak, but I am not willing to shell out $130 (my budget is only $120!), and I have a gift card for $50, but I am still not liking the actual retail price. $100 sounds more reasonable to me, and I’m willing to wait for a deal.

Unlike what many might do, I also pay for software at full retail price so I don’t have to worry about whether or not it works, on what PC/Mac, bla bla bla.

My software costs around $15 per (like Pixelmator, which is absolutely AWESOME for the Mac). I also use Picasa (free), but Pixelmator is for the more advanced stuff.

I don’t like to be hassled or troubled for stupid things, and the right thing is to pay for the software anyway.

I probably won’t end up spending this budget, but I need it there just in case.



$2500 is a lot of money per month.

In fact, I should be able to spend less than this, but I don’t want to make anything unrealistic and then blow it and cry in the corner berating myself.

Now that we are CERTAIN we are staying in Canada, I am also more certain of not having $10,000 moving overseas or moving abroad costs that will slap my net worth silly.

Regardless, I have about $5000 that I keep at the back of my mind for if I overspend, as a contingency for things that come up once-in-a-lifetime.

If I don’t spend all the money (IDEAL! IDEAL!), I’ll save it instead. I’m fairly sure that Rent amount for instance at $12,000 won’t be that high, especially if I’m working.



That’s where it gets tricky. My business is selling my brain, and I needs a place to stay, something to eat, etc when I am on site.

I also have to pay taxes, fees, licenses… those expenses will all be tracked on a monthly basis, in a single, communal budget.

I used to keep 2 even 3 separate budgets for business/personal, but then it became too confusing flipping back and forth.

I’m trying to now do it all in one budget, and it will become a massive communal sheet that will be a work in progress for this year.

Regardless, the main goal is to stay under $30,000 for PERSONAL spending only.

..and to save at least $36,000 net this year.



All the rest of my income, and I keep track of it as assets tab in my budgeting tool.

As a freelancer I should also point out the advantage of having unrealized income:

Assuming I work about 3 months next year (on the low side), that’s about $60,000 gross.

  • Realize $30,000 in income
  • Leave about $24,000 in the company as retained earnings (savings) after taxes
  • If I realized the income, I’d be out  another $10,000 in taxes, leaving me $14,000 of savings

On the mid-side, if I work 6 months next year (an average), that’s about $120,000 gross.

  • Realize $30,000 in income
  • Leave about $66,000 in the company as retained earnings/savings after taxes.
  • If I realized the income, I’d be out $25,000 in taxes, leaving me $41,000 of savings

On the high side, if I work 9 months next year, that’s $180,000 gross.

  • Realize $30,000 in income
  • Leave about $114,000 in the company as retained earnings/savings after taxes.
  • If I realized the income, I’d be out $46,000 in taxes, leaving me $68,000 of savings
Notice a pattern? 🙂

All of the above helps me minimize my tax burden if I just don’t spend it.

All the more reason for me to NOT TO REALIZE MY INCOME AND SPEND IT.

I avoid a lot of taxes, especially when you consider how much an impact charitable contributions and my RRSP/TFSA maxing out contribution makes.

This is all not taking into account if I have to pay for business traveling (hotels, flights, train tickets, car rentals, gas… you name it), so my retained earnings may vary by about 25%.

It doesn’t take into account any overtime.

Some months I work, may be more profitable than others.

It also goes without saying that I’ll also be investing that money on behalf of my company to grow in the meantime, which will essentially become my nest egg for retirement.

And done!

My austere-for-me plan for 2013, and a rough overview of how I will be budgeting going forward.

How do you do it?

By a percentage of your net income?

Yearly budget?



  • Tracy

    Your budget seems very realistic! Although … you budgeted $0 for makeup? Makeup is a pretty big expense of mine because I find that I’m always replacing products. Mascara/Eyeliner/Concealer every couple of months. Foundation/Lipstick twice a year. You must have very nice skin to not have to wear it. 🙂

    • Mochi & Macarons

      $0 for makeup is because I don’t need any.

      I have a lot of BB cream, concealer and all that stuff for the next 2 years because I don’t use much of it.
      I also do have nice skin now because I totally changed my diet and I don’t get acne any longer!!

      • Tracy

        Jealous of your nice skin! Just keep in mind that oil-free makeup has a shelf life of around 12 months, and makeup containing oil has an even shorter shelf life due to separation in the fluids. This is from the date that you open the product, so if you have a bunch of backups they can last longer!

  • StudentDebtSurvivor

    My budget is super generic compared to yours. I love it that your broke yours down into each specific category. I have one big category for “misc” that includes gifts, dining out, clothing etc. I know I should break it down more, but as long as I’m generally under budget I don’t really track where each purchase was. Sometimes my misc spending is $50 in clothing othertimes it’s $80 in dog grooming and a $20 bottle of wine. As long as I’m under $200 a month it doesn’t matter to me.

    • Mochi & Macarons

      I’m a bit crazy for budgeting, I know it is unnecessary to break it down like that but I’m curious as to what I spend in those categories.
      It used to be all lumped together but now I have broken it out to see what I really incur in each area!!

  • Anne @ Unique Gifter

    Our budgeting system: Know what our costs are (roughly) and have macro savings targets, then make a poop ton of money. The rest is gravy that sometimes goes to spending and sometimes to savings, depending on what we want to do. I have landed a “real” job over the period where the main savings goal has been “pay off mortgage in 5 years” so lifestyle inflation has taken a decent chunk of our increased household income and extra savings has taken the rest.

    • Mochi & Macarons

      That’s kind of my strategy too.

      I think focusing on expenses first, then income second works for me, because income is not a huge factor in restricting me (how can it? comes in waves..).

  • tomatoketchup

    I don’t really have a set budget but just try to make good spending decisions every day. I’m lucky to have a well-paying, recession-proof job, but my monthly income does vary over the course of the year depending on how much I decide to work and how busy my days are.

    I think a spending budget of $30,000 is reasonable. That is about what I’ve spent myself the last several years once I started working, and I honestly can’t see myself being a happier person by going all extravagant and spending much more than that. Like you, I love to travel and take on average about 6 trips a year (at least one international if time allows), but even with all the travel I’m still able to stay at around $30,000 because I don’t waste my money on things I don’t care about like a big house or lavish car. Meanwhile, I’m surrounded by people much older than me who make twice what I make who have no choice but to work the rest of their lives because their spending habits outpaced their savings. Not the path I want to take.

  • Pauline

    I have a monthly budget because I earn in waves, like you. Owning my home I have no mortgage, and since life changes quite a bit every month, at the moment I try to keep it under $1000 whatever happens. And $2500 for a month back to France every year. I have a rough idea where the $1000 are going but don’t track closely as long as I stay under $1000 I am happy. I agree with Ariana your charts, pies and spreadsheets are always amazing!

    • mochiandmacarons

      The problem is getting used to earning in waves. You really don’t know when your next paycheque is coming, so when you earn a paycheque, you’re lulled into a sense of complacency thinking it’ll last forever (even if it won’t).

      France is going to be my favourite country to visit I think. There’s something that always draws me back, other than the shopping 😛

      Re: charts — Thanks!

  • Ariana

    I am blown away by your budget. It almost looks like a work of art! Any gifts, teas, activities I budget for just gets lumped into the “Misc” row.

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