Whether you are a web or graphics designer, a copywriter, a virtual assistant, social media manager or an online salesperson, freelance work is booming in popularity; an ever-increasing number of companies are realizing the benefits of hiring remote workers over regular employees.
There are many reasons why you might want to give it a go as a freelancer – flexible working hours, the ability to earn as much income as you want, and the freedom to work from wherever in the world you choose. That could be from your favourite coffee shop, or a tropical island. It’s your choice!
But, there’s always a down side, and in this case, it’s that freelancers often experience an erratic income, varying depending on the type and amount of work you do. We’ve listed some top tips to help freelancers take control of their money.
1. Use Separate Bank Accounts:
Many freelancers find that the fact you don’t have to wait for a specific payday to be very beneficial. However, if you charge per job, the amount of money that you receive each time you get paid may not be enough to sustain you through the week or month.
Instead, using separate bank accounts means that you’ll need to physically move money over from the account that you are paid into when you need it. This will allow you to see your money growing (or dwindling!) and is a good way to make you think before you spend.
2. Save Regularly:
Saving money as a freelancer can be very difficult as you don’t know if you’re going to need the money any time soon. But, even if you can only afford to put away a few dollars per month, it’s more important for freelancers to save than anyone else, since there’s no solid guarantee of regular future work.
Even if you’ve been experiencing a lot of demand recently, remember that things can change very quickly for freelancers; you will not only need to be able to keep up with your clients, you’ll need to remain one step ahead of your competition, too. If you’re worried about money, it will be difficult to successfully achieve this. Saving around 5-10% of each pay check you receive is a good way to start.
3. Have a Budget:
Using a solid budget to determine how much you can afford to spend each month is essential for better money management as a freelancer. Drawing up a budget may take time, but this certainly pays off as you’ll be able to see where you’re spending unnecessary money, making it clearer when it comes to choosing what to cut back on.
Don’t be afraid of being ruthless when it comes to your spending – being honest with yourself about the amount that you spend can be nerve-wracking if it’s a lot, but it will enable you to successfully start spending less so your savings can grow.
4. Put Your Prices Up:
When working as a freelancer (especially in the early stages) you might offer a special rate in an attempt to encourage new clients to take an interest in you and give you a chance. But after a while, you’ll probably find that working for a cheaper rate than everybody else isn’t as beneficial as you’d expected. Firstly, you will need to work more often to earn the amount of money that you want. Plus, many potential clients can actually be put off by freelancers who charge lower than average rates – they assume the work will be terrible quality.
Don’t be afraid to ask your clients if they’d be willing to pay more – if you offer a reliable and high-quality service, you’ll be expected to charge rates that reflect this.
5. Carry Cash:
Carrying cash might be getting rather old-fashioned now, but there are many good reasons to withdraw paper money rather than spending on your debit or credit card.
For example, if you are going out for a meal with friends or simply doing your weekly grocery shopping, taking cash rather than your card means your spending will be more limited. Since you won’t have access to the rest of the cash in your account, you will eliminate the risk of running over your allocated budget.
How do you manage your freelance income? Share your favorite tips and techniques in the comments.