Working as a freelancer can be a very, well, freeing experience. Freelancers have a lot of control over their professional lives and are able to choose when they work, what jobs they take, and how they run their business. However, this extra freedom comes at a cost.
Freelance working is precarious at the best of times and a steady stream of work can evaporate unexpectedly. Freelancers, therefore, need to learn how to manage their finances properly. Proper financial management and budgeting will keep freelancers safe during those leaner months when there is less work available.
Here are simple tips that any freelancer can take advantage of in order to better manage their financial situation.
Make Yourself a Budget
Setting yourself a budget is one of the simplest yet most effective means of ensuring that you are operating within your means. Your budget should reflect how much money you have, how much money you make, and how much money you spend.
As a freelancer, there will inevitably be a blurring of the lines between your personal funds and your business income. It is a good idea to set up two bank accounts, one personal and the other for business.
Save Whenever You Can
Freelancers will often find that work comes in waves. Sometimes you will have plenty of jobs to choose from; other times you will be pulling your hair out trying to find opportunities. Saving as much money as possible during those quieter periods will give you a safety net for when things are more difficult.
Think of every client as a potential long-term relationship for your freelancing business. Make sure that every interaction you have with your clients is professional and reinforce your value to them. Many freelancers will take the bulk of their work over the course of their careers from a relatively small number of sources.
Stay On Top of Your Finances
This is especially important if you are not the most organized person, to begin with. There is a plethora of self-help books, apps, software packages and other resources that enable freelancers to keep track of their finances with ease. You should be accounting for every cent you earn and spend, and you should regularly assess how wisely you are spending your available funds.
Finding the right set of tools to enable you to manage your money the way you want isn’t easy, but there are a lot to choose from. There’s a useful article from PieSync which you could benefit from that compares Xero vs QuickBooks, two of the most popular cloud-based accounting packages available. As a freelancer, you will be working as a one-person small business. You can, therefore, utilize a lot of the software packages and tools that have been designed for small businesses.
The above tips should be enough to get any freelancer started with implementing better business habits. As a freelancer, you will be responsible for finding and delivering work, managing your clients, and ensuring that you have enough money to sustain yourself. Managing your money effectively is an essential skill for any freelancer to have; make sure that you take all necessary steps to develop it yourself.