Financial Advice For Freelancers
There are many perks to freelance work and it is something that many photographers, designers, web developers and other similar professionals are turning to. You are in control of your own career as a freelancer, which can certainly bring a handful of benefits, but money is one area that many struggle with. When you work as a freelancer, you will find that money management can be challenging particularly when your income is likely to fluctuate each month. With this in mind, read on for a few financial tips for freelancers that will hopefully help you to control your money and enjoy the perks of freelance work.
Keep Track Of Income and Outgoings
First, it is vital that you have a system in place for tracking the money coming in and out of your business. Using accounting software is smart because it allows you to easily track your money, which will then make it easier to find ways to improve your bottom line as well as make life much easier when it comes to completing your tax return. Additionally, be sure to remember to set tax money aside each month into a separate account.
Keep Personal Finances Separate
It might be easier to combine your business and personal finances, but this always creates a tricky situation because it can be hard to keep track of your spending and get an idea of your financial health. This is why you should always set up separate accounts for your work and try to avoid using one for the other.
Build Up An Emergency Fund
As mentioned in the intro, one of the toughest aspects of freelance work is that your income can fluctuate each month and sometimes heavily. The quieter months can make it hard to manage and will always be stressful, but it is much easier to manage when you have an emergency fund to cover you during these periods. Typically, it is recommended to have around three months of expenses saved up to cover you during quieter periods or you find yourself without work for a while.
Consolidate Your Personal Debt
When you have both business and personal finances to manage, it can often feel chaotic and out of control particularly if you have personal debt payments to make each month. A simple solution in this situation is to use debt consolidation loans that would enable you to combine your outstanding personal debts so that you just have one personal debt payment to manage (note- these types of loans can only be used for personal, family, or household purposes versus business expenses).
As a freelancer, it is also important that you plan ahead as your financial needs are like to change over time and you will need to make plans for your own private pension. This is why a percentage of your monthly income should always go towards the future whether this is into a savings account, investing or a private pension. Additionally, you may want to find alternative income streams and ways to make your money work for you to improve your financial health over the years.
Keep these financial tips in mind and you will hopefully learn to manage and stay on top of your finances so that you can enjoy the many benefits of freelance work.