Well, well, well. Look at us freelancers, living the dream and shaking up the traditional 9-5 work structure. We’re our own bosses, setting our own schedules, and making our own rules. But with all that freedom and flexibility comes a whole new set of challenges, especially when it comes to freelance financial management.
You might be thinking, “Oh great, another article telling me to create a budget and stick to it.” Trust me, I get it. Budgeting can be about as exciting as watching paint dry. But hear me out, because I’ve got 25 points of advice that might just change your mind (or at least give you a good laugh).
25 tips on freelance financial management:
- Start by getting organized. I know, I know. You’re a creative, free-spirited type and the thought of putting your finances in a spreadsheet makes you want to curl up in a ball and cry. But trust me, a little organization goes a long way. Set up a system to track your income and expenses, whether it’s a good old-fashioned spreadsheet or a fancy budgeting app.
- Know your worth. Don’t undervalue yourself or your skills just to land a gig. It’s tempting to take on any job that comes your way, but if you’re not being paid what you’re worth, it’s not worth your time or energy.
- Don’t be afraid to negotiate. Along the same lines, don’t be afraid to negotiate your rates with clients. It’s okay to ask for what you deserve, and the worst they can say is no.
- Set aside money for taxes. This one is a biggie. As a freelancer, you’re responsible for paying your own taxes. Set aside a portion of each payment you receive to cover your tax bill at the end of the year.
- Create a retirement plan. Just because you’re not tied to a traditional job doesn’t mean you can’t plan for the future. Consider setting up a solo 401(k) or SEP IRA to save for retirement. Find out more: SEP IRA vs Solo 401(k): Which Should You Choose? – Forbes Advisor and Retirement Plans for Self-Employed People | Internal Revenue Service (irs.gov)
- Get insured. Don’t forget about the importance of insurance, whether it’s health, liability, or both. You never know when you might need it, and it’s better to be prepared than caught off guard.
- Have multiple streams of income. Don’t put all your eggs in one basket. Diversify your income streams to reduce your financial risk and give yourself a cushion in case of unexpected expenses.
- Take advantage of tax deductions. As a freelancer, you’re eligible for a number of tax deductions that can save you money. Keep track of your business expenses throughout the year and claim them on your tax return.
- Set financial goals. Whether it’s saving for a down payment on a house or building an emergency fund, having specific financial goals can help you stay on track and make smart financial decisions.
- Save for the lean times. This, together with taxes, is at the heart of freelance financial management. Freelancing can be unpredictable, and there will be times when work is slow or non-existent. Plan for these lean times by saving a portion of your income when work is steady.
- Don’t forget about your personal finances. Just because you’re running a business doesn’t mean you should neglect your personal finances. Make sure to pay off any consumer debt, save for emergencies, and create a budget for your personal expenses.
- Use a business credit card. A business credit card can help you separate your business and personal finances, and can also earn you rewards or cash back on business-related expenses.
- Build an emergency fund. It’s important to have a financial cushion in case of unexpected expenses or emergencies. Aim to save at least three to six months’ worth of living expenses in an emergency fund to give yourself some peace of mind.
- Make invoicing a priority. As a freelancer, getting paid on time is crucial to your financial stability. Make sure to send invoices promptly and follow up with clients if payment is overdue. Consider using a freelancer-specific platform like Wedo. Wedo is a social freelance network that allows freelancers and businesses to automate their invoices, contracts, and payments: freelance financial management in “one box”. It also offers features like 4K video and chat, conference capabilities, and the ability to build a community around your niche.
- Don’t be afraid to ask for a deposit. Asking for a deposit upfront can help ensure that you get paid and reduce the risk of non-payment.
- Keep track of expenses. It’s important to keep track of your business expenses for tax purposes, but it can also help you identify areas where you might be able to cut costs or save money.
- Set boundaries with clients. As a freelancer, it’s important to set boundaries with clients to protect your time and energy. Don’t be afraid to say no to unreasonable requests or to negotiate fair compensation for your work.
- Don’t forget about self-care. It’s easy to get caught up in the hustle and grind of freelancing, but it’s important to take care of yourself both physically and mentally. Make sure to set aside time for rest, relaxation, and self-care to avoid burnout.
- Seek out resources and support. Freelancing can be isolating, so it’s important to seek out resources and support to help you navigate the ups and downs of self-employment. Consider joining a freelancer group or seeking out a mentor or coach.
- Educate yourself. As a freelancer, it’s important to stay up-to-date on industry trends and developments. Consider taking courses or attending workshops to further your education and skills.
- Don’t be afraid to ask for help. Freelance financial management can be overwhelming. If you’re struggling, don’t be afraid to ask for help. Consider seeking out a financial advisor or counselor to help you get back on track.
- Don’t let fear hold you back. It’s natural to feel afraid of the unknown or to worry about financial stability as a freelancer. But don’t let that fear hold you back from pursuing your passions or taking on new opportunities.
- Keep learning and growing. The gig economy is constantly changing, so it’s important to stay open to new ideas and approaches. Keep learning and growing as a freelancer to stay ahead of the curve.
- Have fun! Freelancing can be stressful at times, but it’s also an amazing opportunity to do what you love and be your own boss. Don’t forget to have fun and enjoy the journey.
So there you have it, folks. 24 points of advice on freelance financial management It might not be the most exciting topic, but it’s an important one. Remember, a little organization and planning can go a long way in helping you achieve financial stability and success. And don’t forget to check out platforms like Wedo to help streamline your financial management and grow your business. Happy freelancing!
Wedo.ai is a social freelance network that helps freelancers and businesses automate their invoicing, contracts, and payments.
With Wedo, freelancers can easily communicate with clients through 4K video and chat, hold conferences, and even build a community around their niche. Wedo acts like a bank, allowing freelancers to manage their finances in one place and streamline their business operations.
Overall, Wedo is a powerful tool for freelancers and businesses looking to simplify their workflow and collaborate more effectively.