Working as a freelancer can be a rewarding and exciting way to supplement your income or even become its sole source. You’ll have complete control over your work and scheduling, which are major incentives for most freelancers. Still, many are concerned with the potential lack of income stability while freelancing. To handle this, you will essentially have to become your own financial planner.
Know Your Financial Picture
The first step in handling your finances while freelancing is to have a clear picture of your expenses, debts, and other financial obligations. These include long-term planning such as retirement saving, home purchase, and student loan payoff. Don’t forget to plan for work-related expenses such as office supplies, space rental, and travel to and from client meetings. The first step in handling your finances while freelancing is to understand your financial pictures.
Keep Your Expenses Low
Freelancing can be very unpredictable at times. Losing a major client can put a huge strain on your finances. Be prepared to handle the unexpected by budgeting accordingly and maximizing your savings during profitable periods. Take advantage of free service from the public library such as internet access, reading materials, and classes. Consider joining a co-op of other freelancers to pool expenses.
Keep Accurate Records
Keeping track of your contracts, invoices, and payments not only helps you manage your money while freelancing, it is very valuable when attempting to take on debt such as a mortgage. Because freelancing is non-traditional, lenders want to know that you have a solid financial outlook. This requires extensive documentation, such as as profit and loss statements, ledgers, and invoices.
Take Advantage of Freelancer Benefits
There are many benefits that are available to freelancers at nominal charges. Organizations such as the freelancer’s union offer low-cost health insurance plans, retirement plans, and credit union memberships. Take advantage of these programs that are designed to help you save money while you perform your craft.
Network and Gain Clients
Most freelancers will tell you that the key to managing your finances is to have enough clients to keep you afloat in the event that you lose a major client. Attend networking events geared toward freelancers and meet other people in your field. Diversify your portfolio of clients to make sure you have adequate cash flow. Many freelancers have a mix of high- and low-paying clients that keep the money flowing on a regular basis.
Grab a Side Hustle
Many freelancers moonlight at traditional part-time jobs to supplement their income. You can still do what you love while enjoying the stability of a relatively stable paycheck. Some freelancers work as contractors for employment agencies during slow periods.
There are many ways to manage your finances while freelancing. From pooling resources with other freelancers to taking advantage of low-cost benefits, there’s no reason your finances should suffer while you do what you love.