Planning a 2015 Budget

The vintage party dress that I bought for $15.

This weekend I solved the “I need a new ball gown that isn’t the same dress I wore last year” problem by going to the vintage shop and snagging this amazing dress for $15. (I’m generally fine with wearing the same outfit twice, but my other formal gown has Emotional Resonances that I don’t particularly care to spend the whole night resonating in.)

Finding this gorgeous dress was a bit of strategized luck; normally I wouldn’t want to pay vintage prices, but the shop is shutting down and everything is hugely discounted. I left the store with “go back and buy more dresses” added to my GTD list, and then I thought “wait a minute, Nicole, you haven’t even figured out how much money you can spend on clothes this month.”

So that’s what I’m going to do today.

Last year I didn’t do much in the way of “budget planning.” My monthly freelance income increased nearly every month while my expenses went down, and because of that I didn’t really think about budgeting.

This year, it might be a good idea. At least, you know, as a thought exercise.

Step 1: Estimating my monthly earnings

My freelance income is both variable and predictable. Right now, I have $1,030 worth of assigned work per week. This is the steady work that I’ve already arranged to do for my various clients, such as my weekly Ask A Freelancer column at The Freelancer. During the first full week of January, I was able to complete $1,311.80 because I had some extra work, and I can continue to get extra work if I pitch articles, pick up copywriting assignments, or — ideally — add another client to my portfolio.

So, for the purposes of estimation: I can predict that I’ll have at minimum a $4,120 monthly income (gross, before taxes). But here’s how I explained my 2015 income projections in my new column Tracking Freelance Earnings for The Write Life:

I’m earning around $4,500 a month now, and I’d like to push it to at least $5,000 a month by summer 2015. If I average $5,000 per month over 2015, I’ll earn $60,000 for the year, which would be incredible.

$5,000 is a nice round number to work with, budget-planning-wise.

Step 2: Calculating my monthly fixed expenses

Rent (inc. utilities): $675

Health insurance: $212

Smartphone: $90

Internet: $75

Therapy: $276

Total: $1,328

Step 3: Estimating my monthly variable expenses

Debt: $800 (debt is only variable in that I can choose, within a certain range, how much I want to pay towards it)

Groceries: $250

Bus: $30

Total: $1,080

Step 4: Figuring out what’s left over

$5,000-($1,328+$1,080)=$2,592

Wait, really? I might have over two grand of discretionary income each month?

I should really set aside some of that for taxes. The recommended 25% of $5,000 is $1,250, but that’s just a little under what I pay in estimated taxes every quarter, so I don’t think I need to save $1,250 towards taxes every month. Adding “make CPA appointment” to the GTD list.

But even if we assume that, generously, I put $1,000 towards taxes and another $1,000 towards savings (OR TRAVEL, I ALWAYS SEEM TO BE TRAVELING SOMEWHERE), I could still end up with $500 in play money each month, to be used towards pretty dresses, fancy drinks, dinners out, Patreon pledges, haircuts from my favorite stylist at Great Clips, books, movies, and a new pair of black pumps to replace the ones that have a hole in them.

Or I could pay down my debt more quickly.

Or I could go back to that vintage store.

I feel like the richest person on God’s green earth. (Quick, tell me everything I forgot to consider. Even if I don’t earn the full $5,000 every month, I still feel like I have a lot of wiggle room in my budget. Is that right?)

What about you? Have you figured out how much discretionary income you’ll have every month in 2015? Is that something you consider when you plan your spending?

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