My recent move has left me a little shorter on cash than I would like. I was trying to figure out why I was coming up short and how to address the issue when it occurred to me that my current spending has been based on a different set of financial circumstances and assumptions. I’ll be spending the next few months adjusting to new realities.
Pre-pandemic, business was booming, with my primary and secondary customers providing me a good deal of work, which in turn increased my income. I was able to make several optional purchases on the credit card and pay them off right away because the budget allowed for it.
However, the pandemic has messed up my budgeting process. Or rather, with my spending habits. I don’t know about you, but my spending expands to fit my ability to do so. I should know better. While I can afford some more art for my home or–more practically–upgrade my plumbing or light fixtures, I also have an excellent opportunity to do more saving and investing. That “rainy day” fund should always have some money in it so unexpected expenses don’t catch you completely off guard. I’ve heard some financial gurus say that you should have 6-9 months’ salary saved up in the event of unemployment or other contingencies. My ambitions are less ambitious, though they probably shouldn’t be. I’m closer to 1-3 months.
Regardless, backup funds are helpful, particularly for the enterprising freelancer because you cannot always ensure that your customers will have work for you. Keep an eye on your money, all. It’s rough out there.