Being freelancers and financers at the same time can be extremely exciting, but it can also be a hugely stressful time. This is especially the case this year because of the way in which the global health scare diminished the number of contracts available.
Fortunately, it is not that difficult to properly manage your finances when you know what to do. We will thus focus on some tips that are particularly helpful for freelancers from around the world. Whether you write articles for a living or you play at the best online gambling sites, remember the advice to keep all your finances in control.
1. Face The Problems You Have
For starters, a big reason why many freelancers do not talk about their finances and do not take active steps towards financial independence is that they do not face the problems they have. Also, there is this stigma surrounding personal finance talks, especially when it comes to having made some financial mistakes. There is a misconception that some freelancers cannot handle the complexities associated with personal finance.
Related: How to Boost Your Business Efforts With Freelancers
2. Plan For The Bad Times
When you are a freelancer, a very important thing to understand is that there will be times when you will be earning very well and times when you do not have work. It does not matter if your overall earning keeps growing. There are times when you do not have an income, so you have to be ready for that.
Everything starts with understanding your real average income. Think about how much you earned in the past year. Then, divide that by month to figure out how much you actually expect to earn. By taking this approach, you have a better understanding of your finances, and you can properly prepare for downtime.
Related: 5 Basic Guidelines of Working as a Freelancer
3. Don’t Forget About Taxes
Employees usually get most of their taxes taken out of their paychecks. With freelancers, it is the individual’s responsibility to take care of these expenses. Unfortunately, this rarely happens. When tax season comes, many are hit by unexpected taxes that ruin their budget.
The best thing that you can do is to always deposit a percentage of your income (based on tax laws in your country) in a bank account. You will thus have money available when it is come to pay.
4. Separate Personal And Business Expenses
Never pay for business expenses with your personal funds and never use the business income for personal reasons. At the end of the day, your freelancing is a business, and you need to treat it as such. Many freelancers do not have two bank accounts set up, one for business, and one for personal funds. Avoid this huge mistake, and you will quickly notice that it is so much easier to manage freelancing finances.
Related: Invoicing for Freelancers: Tips for Managing Finances and Taxes
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5. Track Everything
Last but not least, you have to track everything that comes in and goes out. Track spending in order to be able to use tax writeoffs and quickly figure out if there are some problems you have to deal with. When you do not track your finances, it is impossible to properly manage them.
