Managing Money for Freelancers

If you thought that freelancers have an easy and comfortable life,   you are highly mistaken. While they do have the freedom to work at their own pace, they too have deadlines to meet and do succumb under pressure, especially when it comes to managing their finances. They need to chalk out a financial plan as they do not have regular income. They are self employed and are not necessarily committed to a particular employer. Your clients will pay you regularly, as you work for them, but bear in mind that payments do fluctuate and sometimes arrive later than promised. Hence, freelancing is risky without a financial plan. As a freelancer, you need to take charge of your money.

Backup funds: In times of emergencies, it is important that you have enough funds in your bank account. Sometimes even usual expenses like paying utility bills or groceries can be an emergency when you do not have enough money on you. Hence, financial experts suggest that if you’ve decided to take up freelancing, make sure that you have at least six months of your total expenses in form of savings. Ideally, the more your income would fluctuate, you will need more savings in place.

Organise your finances in separate accounts: Make sure that you have one such account dedicated to all the payments that come from different clients, so the payments to this account are steady. Next, decide on a particular amount that you could spend, every month, and transfer only that chunk into a separate account, which is your personal account. For instance, if you are making a total of Rs 50,000 from various clients and you spend roughly about Rs 20,000, every month, make sure you transfer only that money required by you to a separate account, which is your personal account. By doing so, financial experts say, you will be able to keep track of your expenses and manage finances wisely. At the same time, make sure you have a life insurance, medical policy and a personal accident policy in place, as you do not work fulltime with one such employer only, who will cover you in case of an emergency.

Save first: Since your payments fluctuate, it could also happen that you may lose a client. Well, this definitely sounds scary but if you try and curtail unwanted expenditure, it would be better. For instance, if you are a person who likes to spend on dining out regularly, try and cut down on this habit. Taking baby steps to curtail unwanted expenditure or spending roughly on credit cards, can help you manage your money better. The thumb rule is to save first and then spend the rest, advice financial experts. Once you are comfortable with your savings, you could look at splurging a bit like going on a vacation or buying your favourite gadget.

Track your income: Because you work for multiple clients, it may so happen that sometimes you could lose track of one of the sources of income. In order to avoid this, financial experts’ advice that you stay alert and jot down your payment details, on regular basis. This will also help you to figure out if you need to take up another project or should raise your fees. By doing so, you will also know where you stand, financially.




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