Freelancer Finances: Budget Tips to Help You Stay Afloat
Making the leap into the freelancing world can be an exciting move for any professional with an independent spirit. Freedom of choice and flexibility in your work are often high on the perk list of self-employment, but building in a few extra layers of financial planning and security into your business is a smart move for any budget-savvy freelancer.
Need a hand to help juggle finances and ensure you’re set up to make it through the occasional ups and downs of the 1099 life unscathed? These tips from the Hiring Headquarters—Upwork’s resource for entrepreneurs, executives, and freelancers—will help set you up for financial success and stability.
Build a Strong Safety Net
When you’re starting out as a new freelancer, the uncertainty of where your next paycheck will come from and when it might arrive can be a source of anxiety. This usually lessens as you grow your business and spread the risk across more clients, but even seasoned veterans can find themselves in unexpected circumstances that put an unwelcome strain on their cash flow.
That’s why having a fallback plan in case of an emergency—or a “backbone fund”—will help you stay afloat in leaner times and give you more options for focusing on a fulfilling workload.
“Freelancing? The One Survival Tip You Should Know” drives home the importance of a backbone fund, explaining what it is and the benefits of having such a financial safety net. In essence, this fund is money you set aside to pay for living expenses during slower periods of time, though its value runs deeper.
One of the biggest benefits a backbone fund offers is the flexibility to say “no” when you might otherwise be inclined to take on work that isn’t ideal for your current experience and pay level. When things are tight, it’s tempting to take on new assignments or clients to help make ends meet, even if they’re not opportunities you’d normally pursue.
The article also explains how to start your fund, so you can avoid the stress and energy drain that anxiety about money can bring on.
Put your Finances on Autopilot
Most freelancers enjoy the craft of coding, creating, writing, or utilizing whatever unique skills they have that align with their preferred area of focus. Tackling the financial side of the business—with all the number crunching, spreadsheets, and paperwork that entails—usually falls under the “necessary evils” column on the task list. Fortunately, there are ways to free up your time so you can focus more on on the work you enjoy.
“How Freelancers Can Manage Their Finances Automatically” offers helpful suggestions to help you automate financial transactions to minimize the time they take away from your other important duties. If you’re keen to focus on earning more money instead of tracking its flow through your business, the article outlines three steps to get started.
1) Keep your accounts separate. Separating your business accounts from your personal accounts makes it easier to clearly track all income and expenses related to your business without any added guesswork. Using a business bank account and credit card can cut down on the hassle of trying to parse out which expense goes with what when you’re balancing your books.
2) Find a good accountant and stay in touch. Touching base with your certified public accountant (CPA) more than just once a year can cut down on the time and money it costs to get through tax season.
3) Create an automated routine to track your finances. By setting up a pre-determined approach to track your income, expenses, and taxes, you can save yourself a lot of time and energy. Establishing this routine, then sticking with it, will minimize the time you have to spend figuring out how to handle theses necessary tasks as they arise.
Check out the Hiring Headquarters for more tips to help your freelance business thrive!
A long-time freelance writer, journalist, and author, Nathan's work has appeared in more than 40 print and online publications, ranging from IGN and GameSpot to Forbes and Mac|Life. Beyond traditional writing pursuits, his passion extends to creating killer content marketing of all kinds in the tech, games, business, and publishing worlds.View Nathan Meunier’s other articles