The freelancing world is experiencing rapid growth and is now the place to be for any professional with an independent spirit.
From simple essay writing services to advance technical engineering jobs, freelancing has become a top choice for many as it offers freedom of choice and flexibility of work.
Unfortunately, it doesn’t always offer flexibility in terms of pay. The need to wait even two weeks to get paid or worst of all land a job is an insurmountable obstacle to a lot of freelance writers.
A growing number of people are taking freelancing as a full time job due to lack of employment. It is therefore vital for freelancers to manage their money as they lack the safety of a guaranteed monthly pay.
In order for you to avoid financial disaster and be able to move up to better-paying clients and ultimately earn more, you will need to be able to manage your finances. This is to enable you to stay afloat for a couple of days as you await your payday or next job.
Here are five tips to getting your finances in order for success and stability:
1. Plan Your Finances
Have a flexible financial plan that you can stick to. Keep it simple and realistic and ensure it covers all aspects of your finances. You should bear in mind that, as a freelancer, your earnings will rise and fall throughout the year.
Consider the following as you plan out your finances:
Manage Your Payment Schedule
You can schedule your bills not to fall on the same time thus avoiding having a financial strain.
Plan for Taxes
It’s every citizen’s obligation to pay taxes. Taxes do take a large chunk of your income, about 30% and it’s therefore important to consider taxes in your financial plan. You can arrange to pay your taxes on a quarterly basis to avoid it piling up into a huge obligation at the end of the year.
Ensure that you file your tax returns and keep your tax records well to avoid penalties.
There are a lot of apps and software that can help you keep track of your finances. Technology provides great financial solutions by automating your routines to track your finances. This can help you save a lot of time and money.
Once you’ve established your automated routine, it is important to stick to it.
Find a Good Accountant
A good accountant can help you manage your finance and tax returns and also offer you financial advice on how well you can cut down on your expenses. They can also help you cut down on the time and money spent through tax season.
2. Create a Rainy-Day Fund
As a freelancer, there is a lot of uncertainty of where or when your next paycheck will come. Having a ‘Plan B’ is therefore important to ease the downtimes and enable you to stay focused.
Try as much as possible to have more than 6 months of living expenses in a savings account. This will help provide a financial cushion that will see you through till your next pay or job.
Once you get paid, ensure that you refill your rainy day fund for another season.
3. Learn To Buy Cheap
Buying cheap can help you save a lot. First, carry out price comparison before buying. You might be surprised on how much money you can save. Also, you might get shops that offer major discounts or coupons.
Before going out shopping, ensure that you have a shopping list to avoid impulse buying. You can also do bulk purchases on products that do not have close expiry dates. Buying goods in bulk enables you to have a great price saving margin, saves time, and creates convenience.
4. Invest Early
Start saving and investing early in order to easily achieve financial independence and have a comfortable retirement. Also, invest in health insurance.
5. Keep Your Accounts Separate
Having separate accounts for your personal and business use is central to a money management strategy. With no clear separation between personal and business money, it’s easy to exhaust finances that you should be saving for a rainy day or other expenses like rent and tax.
Separating your accounts will make it easier to clearly track all income and expenses relating to your business and personal accounts. You can consider drawing a certain amount of money per week.
This will help you develop a routine living within a certain budget and get to make things much more predictable and easier to manage your finances. Any extra money from your weekly withdraws can be saved.
Managing your finances provides you a gateway to financial freedom. No matter what freelance job you do, be it writing, graphic design or offering a proof reading service, having a financial plan is a smart move for a budget savvy freelancer.
It will give you peace of mind and puts you in a better survival position. This will enable you to thrive no matter what the economic climate is.
Author's Bio: Kevin is a professional educator and a private tutor with over 8 years of experience. He is also a content writer for various blogs about higher education, entertainment, social media & blogging. During his off time, Kevin enjoys traveling and cooking. Feel free to connect with him on Facebook, Twitter, Linkedin & Google+.