“I am a freelancer as it has more benefits than a full-time employment, but a steady income is not one of them. I do not know how to manage funds.”
Working as a freelancer is a rewarding process as it gives you a chance to become your own boss. However, one of the pitfalls is that your clients need chasing before they pay off, and the meanwhile, outgoings continue to go out regardless of cash inflows.
Meeting all of your needs with money that you receive in dribs and drabs is not easy. Even though you throw barrages of reminders, your income continues to stay erratic. You may muse about taking unsecured personal loans with bad credit and no guarantor to meet your short-term needs, but again you need funds to reimburse your loan. Here is how you should manage your finances if you are working as a freelancer.
Create a budget
Budgeting helps keep overspending at bay. This will indicate your fixed expenses such as groceries, broadband and mobile bills, utility expenses, food and drink, travelling, and the like. Of course, you will set aside a small chunk of money for emergency. Since freelancing does not have bar of steady projects, chances are you will get half of the projects this month as compared to the last one. Advance planning will help you make the most effective use of your time, ensuring you receive as much income as your expenses.
Create an emergency fund
Always be prepared for rainy days. In your bad time, the more you flinch from meeting unexpected expenses, the more you encounter them. From the day one, you should spare some money to build up your cushion. Suppose, you fall ill and become unable to complete your clients’ projects in time, you will be able to use your savings to recoup.
Try to get aid faster
Chasing clients peeves freelancers, yet it is crucial. Unsteady cash flows wobble finances, which results in disappointment. While you have to constantly send in professional invoices, you cannot be brusque to them otherwise it will affect your career in the long run. So what can you do?
You should get half money in advance before you begin to work on a project. However, you can get full payment if your service has a nature of forcing your client to pay in full before the final render. However, it is not possible for all freelancers, for instance, freelance writers. Let your clients know about your payment terms and conditions. If they miss it, send over a professional invoice and keep sending it unless they pay you.
Have multiple clients
Targeting multiple clients for multiple projects is better than having one or two clients for big projects. Since income is not consistent in a freelancing career, you should look for ways to have multiple income sources. Try to hone your skills in other profiles as well. For instance, if you are a freelance graphic designer, you should take coaching of web designing. This will help you attain more and more work.
Track your transactions
Make a list of your regular expenses to monitor it at the end of the month. A strict control over your money is paramount to bring financial stability. Do not forget of credit card transactions, as you have to clear your bill within the given period.
Cut down on your unnecessary expenses
Temptation burns a big hole in your pocket. Spending money is appropriate as long as it is crucial. Do not risk investing money in things that are not urgent and when you can put off your buying decision. At the end of each month, look at the list of expenses you incurred. Examine if you can cut back, for instance, eating at a restaurant, cinema, night outs, and so forth.
Money management as a freelancer can be hard but it is not impossible. All you need to do is to stay financially disciplined. As long as you are able to get paid off and spend wisely, you can tap into your finances.