Managing Your Finances the Freelancer Way
Being a freelancer certainly has its perks. You get to work on your own terms and conditions, you get to enjoy your time according to your own schedule and most of all, you’re free to work on multiple projects at the same time. This gives you a great advantage as you can manage your time the way you want; however, you’re also sometimes compelled to overwork so you can’t make as much money as you can using your skills. After all, if you’re not making more money as a freelancer, then you’re certainly wasting your full potential.
However, managing your finances as a freelancer can be quite difficult. If there’s one thing that’s true about freelancing, it’s the fact that it’s a very uncertain way of living. No matter how organized and planned you are, you can have more or less projects at a given time than what you’ve planned for. This makes the true skill in freelancing the ability to foresee periods of uncertainty and have contingency plans for when they arise.
In order to make the most out of your freelancing career, here are some ways to manage your finances the freelancer way.
Time Your Projects & Invoices
Being a freelancer is very uncertain. You can be wrapping up a project and have another one pending at the same time. You can also go through a period of ease, where no projects come your way. In these situations, it would do you a great deal of service to time your projects and invoices beforehand, so you have your affairs in order. For instance, it’s a great idea to have a customizable template for an invoice through which you can bill your clients for timely payments. This will provide you with an easy and efficient tool to create invoices spontaneously, which will make your payments timely and more predictable. That way, you won’t have to start multiple projects at the same time, and receive delayed payment that put your expenses on pause. You’ll also be able to plan your projects whenever you can, and keep a constant and a manageable work schedule.
Separate Business and Personal Accounts
What many freelancers fail to realize is the fact that their work is considered their own small little business. It’s a business in which they’re the sole owners and employees at the same time, but every business needs a budget to operate. You can’t expect to operate a business when all your finances are located in the same place; it will be chaotic. Make sure to separate business and personal accounts, so that every account gets allocated its fair share of your finances.
Speaking of allocating finances, separating your accounts is only the first step in the process. The second, and most important, step is to plan your finances and allocate the required budget to each division. For starters, you should be aware of your business needs; the expenses, upfront costs, and equipment investment. You don’t have to carry out all the payments at once, but you need to have an idea about what to expect at the very least.
The same goes for your personal account. If you have certain plans, such as getting an apartment or a car, then you need to open a savings account to deposit a part of your income. After calculating all your expenses and allocating the required budgets for your needs, you should save some of your own personal spending as well.
Revisit Your Plans
Every now and then, make sure to revisit your plans and modify them if necessary. If you’re thinking of expanding your area of work or upgrading your packages, you should analyze the full aspects of this change. For your finances, this can mean investing in new equipment or upgrading your internet speed, for instance.
Keep Track of Your Finances
The best way to make sure that you’re on track is to keep an eye on your finances. It can be very tempting to spend money as long as you have some cash in hand, but you’ll be less tempted to give in to spontaneous urges if you know this cash should go elsewhere. That’s why having a personal journal, or a finance-tracking app can prove to be quite helpful in reaching your goals.
Consider Cost-Effective Strategies
It can seem that the best way to manage your finances is to limit your spending, but sometimes you’ll have to invest an upfront cost first to reach a more cost-effective option. This can be true in many situations, such as investing in a health or auto insurance plan, for instance.
Managing our finances as freelancers can be quite a headache. There are so many uncertainties that we have to handle ourselves, but this is what makes planning our finances crucial. By taking these simple yet effective steps, you’ll be able to make the most out of your freelancing career.