5 Money Management Tips for Successful Freelancing
Decades ago people wanted to get a well paying job and earn enough money for them and their families. Now more and more people are drawn to the freelancing dream: work as you wish and earn enough money for a comfortable living.
After 9 years of freelancing full time, I can tell you this has turned into a dream come true for me, but money can become a problem, if you are not careful enough.
When you are a freelancer, you no longer get a monthly salary.
Good or bad, this meant that each month, someone paid you money. When you become self-employed, it’s up to you to earn your living, which can turn tricky sometimes.
Here are my top money management tips to help you as a freelancer:
Always have an emergency fund
Anyone should have an emergency fund, you never know when you lose your job, get into a serious car crash (and have costly repairs to take care of), need expensive medical assistance etc.
As a freelancer, tides can turn stormy even faster – all you need are few weeks of no client work and you’re doomed. As bills pile up, there’s little chance to make it, if you don’t have an emergency fund.
READ MORE: How to Stop Being Broke – The Ultimate Guide
A simple trick, saving up some money in a jar, envelope or a savings account, can save you when you most need it.
As a freelancer, an emergency fund can make the difference between surviving a slower time in your business or having to look for a job again.
Keep business and personal accounts separate
If you are running an LLC or a similar type of business, it’s almost clear that business and personal accounts are separate. But in many cases beginner freelancers tend to mix ‘business and pleasure’ and this can cost them down the road.
Your business account should reflect your biz related income and expenses, while your personal account should contain your personal transactions.
Get a good health insurance
If you are not being employed, you’ll need to think about all the benefits employees usually get and try get them on your own.
Both I and husband work at our small LLC (different industries, under the same legal ‘roof’), so we both pay for our benefits. Whatever your legal formation, make sure you are covered.
Just as with the emergency fund, if you run into a serious issue, having a health insurance will take the load off your shoulders and allow you to get back on your feet.
Imagine being sick (so not being able to earn your living) and having to pay for some pretty expensive medical procedures/medication. That’s not a good place to be in.
While you won’t be able to make money as usually, when sick, at least you’ll get your medical bills paid for and not get into debt for this.
Keep an accountant close
We are required to have an accountant to do our taxes monthly and this saves us a lot of headaches.
Of course, I’d be happier if I didn’t have to pay her monthly, but, on the other hand, she’s proven to be a great professional and saved us a lot of time and money, by handling ALL our paperwork, taxes, calculations etc.
Not to mention that, as soon as a new law appears and affects our business, she’s in the know and informs us as soon as possible.
Keep your business expenses low
I have met a lot of small business owners who quickly drowned into debt, because they wanted to show off how successful they are, so they started spending money for stuff they didn’t need: expensive office spaces, a lot of employees, luxury cars etc.
I’ve worked online for 15 years, the last 9 as a full time small business owner.
I don’t have a flashy car and done my best to keep business expenses low. While other competitors went bankrupt years ago, my small business is still booming, I can travel as much as I can and care for our daughter.
Of course, having a cool office and driving a luxurious car would be cool, but I’d rather stay in business for the next 50 years, than jeopardize our future for nothing.
What other money management tips would you add?