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Get a holistic view of your spending by adding personal and business expenses

Once you figure out how much you’re spending on housing, living requirements, and any debt payments, you need to add any other expenses. These can include “fun” spending, personal savings goals, and more. This will give you a holistic snapshot of your current financial situation. 

You’re going to add all of these expenses to find the amount you plan to pay yourself from your freelance business each month. While you should try to predict your expenses as accurately as possible, understand this is about creating a flexible financial plan so you can determine how much income you should be trying to bring in each year. Identifying and reviewing these expenses can also help you figure out how much you should charge for your services. 

Identify expenses outside of the roof above your head and the food in your fridge

Consider your lifestyle expenses

Take a look at your budget or spending and determine any other expenses that fall outside of the categories you reviewed in the previous step and add these to your workbook. This could include:

  • Clothing 

  • Subscriptions and memberships (streaming services, publications, gym membership, etc)

  • Travel 

  • Entertainment (dining out, concerts, drinks, etc)

Next, consider any upcoming life changes or events that could potentially alter your income needs in the next year. Maybe you’re buying a house, taking a course, or going on a big vacation. Take some time to research the potential estimated costs of any new expenses you’re planning.

Identify any work-related expenses

When you're a freelancer, you need to understand all the other expenses that come with the job. This can mean office supplies and software. If you’re setting up your own business, these may be new expenses that weren’t previously in your budget. Some examples include:

  • Office supplies

  • Software 

  • Hardware (additional monitors, ergonomic tools) 

  • Subscriptions (like project management tools)

  • Retirement planning

  • Business insurance 

  • Legal and accounting fees 

  • Advertising 

  • Professional development 

  • Office space 

  • Contractors or hired help 

Clarifying the difference between wants and needs to drive smart decision making 

In your workbook, add current and expected expenses, including savings goals. There are both personal and business expenses to consider.

Once you write out the rest of your expenses, take some time to review the list and decide which are "needs" and which are "wants." Highlight needs in yellow and wants in pink.

Needs are different for everyone. You might not be able to give up your Spotify subscription but could cut down on dining out, and someone else might be just the opposite. And just because something is a “want” doesn’t mean you need to cut it out of your life. This exercise will help you determine what expenses you can’t give up and what could potentially be adjusted or reevaluated. 

For example, you might need office supplies and software to run your business, but you could save on advertising costs by focusing on word-of-mouth marketing instead. You may also love going to the gym, but decide to save and go for runs outside instead. 

Once you’re done it’ll look something like this:

Now that you have your total annual expenses, you can start building your absolute minimum income to help you get a clear picture of how much you need to break even. We’ll tackle that in the next step. 


  • Determined any additional expenses you have and added them to your total annual expenses. 

  • Separated your expenses between needs or wants.

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