Riding the Income Roller Coaster

Dealing with variable income as a freelancer

Today’s edition of Wishful Working is a 3 minute read.

When I open the accounting tab on my productivity software, this is what I see:

Squiggly line with one big peak, two smaller peaks, and other bumps

No, it’s not a mockup of Six Flags’ latest thrill ride. It’s a graph of my last 12 months of freelance income.

If it was the sketch for a new roller coaster, we could call it the “Freelance Finance Flyer,” a ride equal parts exhilarating and terrifying, with peaks that take your breath away and dips that make your stomach drop.

Before I started freelancing, my income could be likened to the little train that circles the theme park. The “Traditional Take-Home Train” — steady, predictable, and not exactly exciting, but pleasant enough. There were a few bumps and turns along the way, but nothing to make you feel the wind in your hair. 2.4% cost of living raise, woohoo! $300 Christmas bonus, yay!

Now, I love roller coasters in real life, but I’ll be honest — the Freelance Finance Flyer freaks me out. Having variable income is not for the faint of heart, and I’ve come to realize there are two main ways to deal with it:

1. Flatten the course

If the up-and-down course of freelance income isn’t working for you, you can do one or more of the following things to flatten the course and make your monthly income more predictable.

Take on more retainer work

Having retainer relationships with some clients means having at least some income that is more predictable month-over-month. 

Get a part-time job for base income

If fluctuating income makes you concerned about covering your bills and basic necessities, you could get a part-time job to provide a consistent income base. Lots of freelancers do this for financial stability and peace of mind, and it adds some variety to the work week.

Build in recurring income

There are nearly endless other ways to diversify your freelance income, and many of them offer recurring revenue. A paid newsletter subscription or course membership could offer monthly recurring revenue, for example. Digital products also provide recurring revenue, although on a less predictable basis. 

2. Embrace the ride

While I have briefly dabbled in retainer work, and I am working toward building some recurring revenue into my freelance business, my main way of dealing with the Freelance Finance Flyer (as evidenced by the above chart) is to hold on and embrace the ride. But even with this approach, you can do things to lessen the blow of those lower income months:

Pay yourself a set salary, set aside the rest

Many freelancers I know pay themselves a set salary out of their freelance income. That way, abundant months offset the leaner months. This is also a great way to sort of separate your business income from your personal income.

Get good at budgeting

This is more of a general tip for all people, but it’s especially useful for freelancers. My budget helps me keep track of upcoming bigger expenses (student loan payments, insurance, etc.) and plan for those unpredictable-but-also-expected expenses (car maintenance, vet bills). I’m a big YNAB fan, but there are lots of budgeting tools out there.

Ultimately, it helps a lot to realize that variability in income is just part of the freelancing experience. It’s a feature, not a bug. It doesn’t mean you’re failing, and there’s no need to feel shame about it. 

Once in a while, I try to remind myself to release my white-knuckle grip on the lap bar and throw my hands in the air. And sometimes scream. 😂

See you next week,