So you’ve begun your freelance writing, and you’ve slowly built it up into a proper business. What things should you think about in order to manage your freelancing income? Here are a few things you’ll want to keep in mind as these tips will help you manage your time and finances while also preparing you for any unexpected expenses as well as slow periods.
Open a Business Account and Savings Account
You will want to open a business account to keep your income separate, so it will be easier to break down how much you’ll want to put toward different things related to your business. This includes paying yourself and funds for taxes, bills, etc.
Set up an emergency Fund
This is crucial; you’ll want to have money set aside for lean times, slow payments, and unexpected expenses. A freelancing income is never consistent. You will want to have a cushion so you can continue to do quality work, and not feel pressure to take any assignment for the fees.
Treat yourself as an employee
You should always pay yourself first, accounting for taxes and deductions, etc. Doing this will also help prevent you from overspending and hold you accountable for the monies going out of your business account.
Project Upcoming Expenses
When you have an idea how much things will be, it sets a baseline for how much your freelancing income should be in order to maintain your business.
Invest in an Accounting System
This is super important! Over time, especially as you begin to make more and have more clients, an accounting system will keep your freelancing income in order, by helping you gauge how much you need to pay in taxes, invoicing, receipts and expenses.
If you keep your outgoing to a minimum, it will help you to feel as if you are making money as opposed feeling as if you are struggling or barely afloat.
Resist Lifestyle Inflation
This one many of us are guilty of. As you make more money, you feel justified in spending more. If you didn’t need the fancy car before, you definitely don’t need it just because you can now afford it.
Pay down Debts
Always. When you are debt free, it’s like freeing up another cash flow, and you never have to worry about it hanging over your head, and it won’t take away from your freelancing income.
I hope these tips will help to guide you in the right direction. And remember, you are one of the lucky few that works for themselves!