Choosing a freelancing career is both a brave and satisfactory choice, after all you are giving up a stable income to pursue your passion. This decision can either be very beneficial to you or cause a havoc on your life as freelancing business may not often bring you work. There are some days when you would be loaded with work and then somewhere you may just consider quitting due to lack of work. But whether or not you have work is just part of the worry that freelancing brings. There are various other facets of the business that you have to keep in mind especially the financial aspect of it.
Here are a few things that can help you get a structure to your finances
Save for taxes in advance
You never know when you may get your next paycheck so it is advisable that you calculate your yearly income or an approx of how much you earn in a year and deduct the taxable amount from it, now that deducted income is the amount you need to save and put aside as taxable income.
If you have a habit of forgetting to pay your taxes on time than start an automatic tax deduction service. This way you will have a major part of your worries taken care of.
Plan your expenses according to your work
Every freelancer will understand the instability of the business they are in. There are times where you don’t have enough work to cover your monthly expenses while there are times when you are earning in abundance. If this happens then make sure that you plan down your monthly expenses and allocate your income according to these famine months. If there are some months where you would need more money than usual then save for those months by cutting back on those where you don’t have many expenses.
Make retirement and savings plan
One of the most important things is to make sure you have a retirement and savings plan. Of course freelancers can work for as long as they want but there will be a time when you will eventually need to start a retirement plan.
Freelancers have to work extra hard than salaried people due to the unstable nature of the work. It may take you years to save up for a retirement plan or an emergency savings plan but it is imperative to keep yourself secure for old age and emergencies.
Budget your expenses
Budgeting your expenses is very important for both salaried people and freelancers. Budgeting your expenses will give you an approximation of how much you need to earn or save and create a plan of action based on it. Plan your major and minor needs in parallel to your monthly earnings or lack thereof (it’s possible!) and prioritize what you need and don’t. This way you will successfully remove clutter from your life and focus on what you really want.
Freelancing can be a liberating job but it is difficult to sustain for the long run. Hence, managing your money effectively can help you run your business smoothly and successfully and provide you a fulfilling life.