Today, over 57 million Americans are freelancers. More and more people are leaving their 9-to-5 jobs and turning to freelance work instead.
Perhaps you’ve done so yourself but aren’t sure how to manage money as a freelancer. In that case, you’re in the right place. In this article, we’ll give you some great tips on freelance money management.
You might think it’s easier to have all money coming in and out of a single account. It can be at first, but when it comes time to do bookkeeping, it’ll be time-consuming to sort through personal vs business charges.
When people learn how to become a freelancer, many usually don’t want to be tied down to one location. If this is you, then a good idea would be to get an online bank account for your business, as you can then access it from anywhere in the world.
As a freelancer, you’ll probably handle multiple clients at any given time. It can be hard to keep track of who owes you what, so make sure you use a good client invoicing system, even if that’s just Microsoft Excel.
What’s great is there are many free programs out there, such as Wave. These will make it easier to write down what work was done and how much you should be paid. You can even schedule invoices to be sent out, as well as payment reminders if clients haven’t responded.
You can also use these invoices to help with reports for income taxes too! Not just that, but many of these invoicing systems come with easy to read dashboards where you can see how much you’ve earned in any given time period, such as the day, week, month, quarter, and year.
One of the most important freelance tips is to always put away some money. While you might have lots of income during one week, you might not have any at all during the next.
While freelancing does come with its benefits, the main drawback is the lack of steady and reliable income. No matter how well you learn how to freelance, you have to account for the random patterns in your income.
For this reason, you should always have a decent amount in your savings account. This can help tide you over should you go through a period of no contracts or a client refuses to pay.
You should also put aside around 30% of your income to account for income taxes. That way, when tax season comes, you won’t receive a huge shock to your finances.
Save For Retirement
When you are out on your own doing the freelance thing, no one is taking money out of your check for you and investing it. That is the bad news.
The good news is we covered this topic in depth in our post on Tips For Saving For Retirement. The better news is platforms like Wealthfront, make this super easy.
From my experience, I am getting better returns than most are with less fees because the platform uses robo-investing to save on fees and increase the odds of your money making more money.
Use this link and get your first $5k managed for free. You can start with just $100 and I promise you will love the platform and the extra money your money can make.
With this advice on freelance money management, you should have a better time navigating freelancer budgeting. As a result, you’ll have more confidence and peace of mind doing what you love most!
Want some help on how to be a successful freelancer? Then apply to School for Freelancers today. In the meantime, check out the rest of our blog section for more freelancing guides.