3 Pointers to Organize Your Finances on a Freelance Income
With the numerous benefits of digital technology, many individuals are either augmenting their income as employees with freelance work or choosing the path of freelancing as a career. In most cases, freelancing is location-independent. Moreover, work schedule can depend on the preference of the freelancer. These are two of the driving factors that attract people to this type of career. However, this can also be an irregular income. That said, it is important to have a game plan if you plan to take on a freelance job.
Have an emergency fund.
This advice also fits people who are planning to leave their current jobs and plan to start their own small businesses. Normally, anyone planning to do this should save enough to cover at least eight months of expenses. But if you are going to depend on your freelance income in the future, it is best to have at least a year worth of emergency fund that you will only use for its purpose, an emergency. As a freelance worker, not all of your clients will be paying on time or even pay you at all. An emergency fund will come in handy. Also, this will make you feel comfortable to not take projects you don’t feel doing.
Monitor your cash flow.
Just like any business entrepreneur, you have to project your income and expenses on a monthly basis. This can be hard since there will be days you will be too busy and there will be times job requests will be scarce. By keeping your expenses to a minimum and maximizing your income, you have more chances of building your emergency fund.
Separate your personal from your business account.
As a freelancer, you need to pay taxes and deal with expenses related to your job. It is best to have a separate bank account which you will use for these payables. Doing so will make it easier for you to track your expenses and savings as well as help you and your accountant in balancing your books.
These are just few of what you need to consider if you are looking into a freelancing career. By taking care of your finances, you are more likely to succeed in this type of industry.