The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Finances Of Freelancing
Making your way as a freelancer in the modern world is an exciting but also nerve-jangling prospect for many people. The attraction of working for yourself both flexibly and independently appeals to many, but the financial insecurity it can bring would be enough to put many others off and stay in full-time employment, even in the cases where they are essentially unhappy with what they are doing.
Managing your finances as a freelancer is a key consideration, whether you are established in the role or considering it as a career choice. Yet there are smart tips to follow to make this aspect of freelancing just that little easier to handle, and leaving you free to do what you do best.
Budget properly
Operating as a freelancer should be akin to running any sort of business activity, and that means budgeting accordingly. As well as factoring in expenses (more of which later) pay yourself a regular wage from your activities as you would from any normal job. Part of the money coming in then needs to be set aside for the purposes of an emergency fund which covers the downtimes (and these will occur, it’s normal) and then for any essential equipment or items that are required through the normal course of operations.
“Budgeting also means having a detailed record of everything that is coming in and everything that is coming out. Keep track of all costs as well as earnings, and over time this will assist you in shaping budgets which are a more accurate representation of your freelance activities,” says Suzie Marks, a freelancer at LastMinutewriting and Writinity.
Look to the future
As well as your current tasks and earning, you must always have one eye set firmly on winning business for the future. That means that your current earnings over the course of one month may not accurately reflect what you will take home in one year because you will need to spend certain times performing speculative tasks for future work as opposed to purely ‘active’ hours that earn you money.
“You need to build in tasks in terms of time, so there is no point reaching your absolute capacity with nothing to spare towards winning new jobs and planning and executing all those necessary business activities and administrative tasks that do not earn you money. You also need to invest in the tech and software that will enhance your future earning capacity by optimizing your processes. Your time is as valuable as your work in every sense,” warns Bob Saunders, a tech journalist at DraftBeyond and ResearchPapersUK.
Get help where necessary
There are not many people who enjoy or feel completely comfortable dealing with all their financial affairs, and for those two very good reasons it’s smart to get help where necessary. Whether it’s a certified financial expert to help you file your tax return, or a business consultant to help you with your business planning process, investing in those sort of services when you need them should not be seen as a wasted cost but instead something that is integral to the smooth operation of your business.
Factor in expenses, taxes and essential life costs
Being a freelancer is very often about maximizing your cashflow and looking for ways in which you can cut costs. However, there are elements to your expenses that you must see as indispensable, either from legal or common sense perspectives. As well as your business expenses (of which there are usually few – one of the many benefits of being a freelancer) you must set aside the right amount for necessary taxes and contributions. Then also consider the relevant insurance (medical, life, travel and so on) as well as other essential costs that life can bring. Do not cut corners with these vital elements.
Don’t ignore your finances
This sounds drastic, but it is surprisingly (and worrying) how many people just prefer to ignore financial matters and therefore bury their heads in the sand. It may be that you are sleepwalking to a place where you will not be able to continue, but you don’t know it yet. Stay on top of all of your affairs and always look to the future. That will bring more security, which has to be good, and don’t be afraid.
About the Author
Ashley Halsey is a professional writer and editor at LuckyAssignments and GumEssays. As well as being involved in many eclectic projects, Ashley is a dedicated mom and a lover of travel, books and modern life.
