What Are Your Wants?
Think about what you want your monthly and annual revenues to be? If you want to earn a six figure a year salary then you will need to take that number and divide it by twelve to know what you need to aim for. Here is an example, if I want to start out at $100,000/yr divided by 12 equals $8,333.33 month.
What Do I Need?
If you have been working as a W-2 Employee, what will you have to have in order to replace your current income? Be specific! If you, have been earning $50,000/year salary, then this is the bare minimum you will have to make to replace your current income as a freelance service provider.
What Is Your Budget?
You need to also consider your monthly expenses when it comes to planning on the amount you will need as a bare minimum. Don’t just consider your personal expenses but also consider any additional business expenses that you may inquire for being out on your own.
For example, if you are an online service provider, who aids your customers in video production and editing you may need a high speed internet provider.
If you happen to be an on-sight freelance service provider like in the home services arena, you may need a heavy duty pick up truck or van. Your personal car may have been fine to get you to your Employer’s business and using his/her company vehicles, but what about you now as a self employed person just starting out?
Setting Your Budget
When it comes to setting your budget, think about the one time expenses and the recurring monthly expenses.