If you are a freelancer or work for yourself, you surely know very well that keeping control of your time, choosing good projects and even, in some cases, working in your pajamas, has its costs, such as the possibility of getting paying clients, endless changes of clients, periods without projects and moments when you have more work than you can handle.
Freelancing has its pros and cons, but one of the biggest challenges of being a freelancer is setting up benefits and keeping your finances in order.
How to manage your finances if you are a freelancer?
1. Pay attention to finances
The first step is to pay attention to your finances. It is essential to dedicate time to managing your business, to be very clear about what your expenses and income are and what the phases of your activities are. This control is easier if you do it periodically and periodically, instead of when the expenses have already accumulated and you have a snowball.
2. Backup fund
You've probably heard about emergency funds before, and if you've had a steady job, you know what we're talking about. But in the case of self-employed people, they actually use a backup fund, which allows them, in addition to emergencies, to pay any late payments from clients or periods when they don't have work. This fund offers liquidity to continue paying fixed expenses, such as electricity, water, telephone, etc. If you're a freelancer, it's very important that you analyze your business cycles, your expenses, and determine the amount you should allocate to said fund.
3. Medical Insurance
Being physically and mentally fit will allow you to ensure your performance. Health insurance will guarantee the possibility of paying for medical care when you need it and returning to your activities without additional worries. In this case, the responsibility for your job security is yours.
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4. Holidays
It's not about working 365 days a year. One of the advantages of being your own boss is that you can take a break whenever you want. That's why you should put together a vacation fund, organize your vacation, and take it. You can choose to travel in the off-season or when there is little work to give yourself a break.
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5. Beware of debts
Since you may have periods of unemployment, you should be careful with the loans or debts you take on. Calculate how much you can pay taking into account the money you have in your backup fund. Never count on money you don't have, that is, don't count on paying that debt with the money a client promised to pay you in the next few days.
6. Make your money grow
Save and invest. If everything goes well, your business can grow. This is where it will be useful to have money to invest when a good opportunity presents itself.
7. There are no small clients
especially if they are good payers! Take care of all your clients, you are your own public relations department.
Record all your expenses and income regularly, budget your taxes, make your payments on time, that is the formula for controlling your finances and preventing the monster of laziness from eating away at your money and your peace of mind.
8. Ask for an advance
As a freelancer, it is important to protect yourself from uncertainty, which is why it is ideal to ask for a 50% advance, which you can use to cover the costs of your work such as materials, etc.
9. Submit fixed-term accounts
Keep a close eye on your payments and commitments, as well as your income.
And send the corresponding invoice to the customer in time.
10. Divide your income into
One of the most important things when you have a project is to understand that personal finances have nothing to do with the company's finances. Pay yourself a salary and separate your income and expenses from work and personal expenses. It is advisable to have two bank accounts.
Learn everything you need to know to take control of your finances in a way that will change your life. Sign up for our 100% online course on Freelancers and their Finances .
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Courses that may interest you
Do you want to acquire more skills to manage your personal finances as a freelancer? We remind you to also check out our courses Entrepreneurship: Create your Business Plan, Create your First Store on Shopify and Planning and Budgeting.
