Earning your living as a full-time freelancer has its upsides, and it’s downsides. On the one hand, your freelancer lifestyle means that you’ll be able to achieve a better work/life balance and set your own schedule. You can even avoid the annoying commute to work each morning if you’re happy to work from home. However, as a freelancer, you’re also in a position where your income is never completely guaranteed.
The good news is that just because your money is often unpredictable as a freelancer, that doesn’t mean that you can’t do things to improve your income management strategy. As a full-time and self-employed freelancer, there are various strategies you can put in place to give yourself financial peace of mind.
1. Get Organized
The first thing you need to do is get organized. Figure out how much money you need to bring into your household each month to pay the bills, and how many clients you’ll generally need to work with to earn that amount. If you have a good idea of your cash flow for the last couple of months, this will give you a foundation to start working with. Just remember that as a freelancer you can’t always rely on the cash you think you have coming in, so it’s essential to have a buffer too.
To ensure that you’re always up-to-date with the latest details on your income, consider setting up a tracking system where you can manage your incoming and outgoing expenses. You should already have something similar set up for your self-employment taxes strategy.
2. Know How to Split Your Money
Standard employees generally have to split their income into two sections – money that they can spend, and money that they can save. The “money they can spend” section also breaks down into cash spent on things like bills and necessary items, and the cash that you might spend on enjoyable things like meals with friends or trips to the cinema.
As a freelancer, you’ll need to split your money into the same saving and spending sections, but you’ll also have to set extra income aside for things like taxes and accounting costs. Make sure that you know how many different parts you need to set up for your cash before you start spending money that you think you have “left over.”
3. Find Help Wherever You Can
As a freelancer, you’ll find that the extra financial concerns that you have to consider make it much harder for you to manage your money than most people. With that in mind, it makes sense to get additional help whenever you can. For instance, a simple budget calculator could make it easier to get an idea of how much you can afford to spend each month, while a spending tracker for your smartphone means that you always know where your cash is going.
Don’t forget to look into professional help too for managing and tracking your freelance expenses. An accountant and a piece of bookkeeping software can be very useful when you’re dealing with a freelance lifestyle.
4. Understand Your Loan Strategy
We all need a little extra financial help from time to time. As a freelancer, there’s a good chance that you’ll need to track down some extra money to pay for your initial set-up when you leave your 9-to-5 job. For instance, you might need a personal loan to pay for things like a desk, chair, and a computer where you can do your work. Your personal loan can also pay for things like office hire when you’re meeting with potential clients.
A great way to make sure that you don’t over-spend on your loan is to spend some time comparing your options before you commit to anything. The more research you put into finding the best loan, the less likely you are to over-spend on interest.
5. Look for Ways to Secure Long-Term Work
Finally, if you’re really concerned about managing your money as a freelancer, one of the things you can do to reduce your stress levels is look for sources of long-term work. If you can find a client that’s willing to use your services over long periods, you’ll know that you at least have a certain amount of money coming into your bank account each month.
While problems can still happen with long-term work, you’ll find that you have much more peace of mind this way. Just bare in mind that you may have to offer discounts to encourage people to sign a contract.
