Freelancing as a career is a bold but happy choice. It was not a path traversed by many, but today 20 – 30% of the workforce in the US and EU countries consists of people working for themselves. Although it may seem cheerful – doing what you really love and being open to choosing who you want to work with, but the carefree nature also carries along with the unpredictability of projects in your hands. This means that your income is dependent on the number of assignments you complete or the number of contracts you are able to deliver.
The financial tunnel is hence full of discomfort, but trust me, if you are just a little cautious you can easily dodge these problems. Being a freelancer myself, I have compiled a list of 5 habits that helped me on my journey and can also help you discover the bright side at the end of the bumpy tunnel.
1. Swear on a budget
This is where you must start with the maintenance department prep for the tunnel. The number of projects you deliver every month determines the inflow of pounds, sometimes good, sometimes not so good. It is in these situations you realize that it would have been so much better provided you kept a track on your budget and reckoned where to save and where to let go.
Here comes in the budget! Sort out your necessities, the occasional luxuries, and the meager savings. This will help you understand how income slips in the snap of your fingers and you will be able to keep the reins in your hand once you know which cheat day or which movie is going to send your budget down the slope. Happy budgeting?
2. Stop ignoring accounting
Don’t give me that (rolling the eyes) look!
If you thought freelancing was an easy-breezy career choice far away from the numbers, then dear, you are far away from reality. You have to keep track of your accounts if you don’t want your business to crash. It is going to help you keep a watch on your revenue and avoid confusion during payments. Make the best use of technology and employ the best software, but you can also consider professional help when in a frazzle. Professional help from a debt collection agency can prove to be a great help for small businesses as well as for our freelancers.
3. Separate your business account
You must have heard typical clingy wives asking their husbands to leave their work in their office. Why not apply that to your accounts? Draw a line between your business and personal account and separate them. Having a different business account will spare you the trouble to classify your expenses at every turn and will let you feel like a business owner. You will be able to get a visual representation of the areas of waste and high spending.
4. Pay yourself regularly
For a lot of people, most of the income that comes from the business goes back into the business. It is important to take out a portion for yourself and regularly reward yourself with a paycheck for your hard work and contribute to your savings.63% freelancers use their savings once a month, so it is undoubtedly wiser to grant yourself an allowance instead of biting your savings account every month.
Calculate your average monthly payment and classify it in different portions pertaining to your goals. Shed these respectively in your retirement account, savings account, health insurance, emergency funds, taxes, and other places and keep the remaining for your leisure expenses that are going to give you peace of mind.
5. Keep yourself updated
If you feel that some practices are not helping you, try experimenting and adjusting it to your convenience. Look for programs that will charge you less premium, keep your payments on time and negotiate when possible. Stick to a discipline and avoid any expense which is out of that route. Look out for the market and increase your rate when possible, to get a better income.
Save all of your windfall money and transfer payments. They come in handy when you’re going through an extremely dry spell. Diversify yourself across people to get more opportunities to show your talent and creativity. If this still messes up your head, seek professional advice to settle your money affairs.
Over to you…
Freelancing can become challenging when you look at it from the financial angle, but there is nothing that a human cannot tackle with a focused head on their shoulders. If you’d had that flame in your heart to decide on freelancing, you have a lot of passion to get past this beginner’s rubble and emerge as one of the epitome of success!
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