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10 Financial Tips You Need to Know as a Freelance Beginner

Written by on June 17, 2019

Being new in your freelance career, you might not be able to make a big income, but you should still be able to manage it properly.

A freelance career will possibly require you to be more mindful of your spending since you will have more things to invest in instead of just your personal expenses.

Freelancing will give you the opportunity to continue making more and more money the harder you work. In order to make the most of your payments, you should know how to always keep track of your finances. Here are some of the best tips to help you achieve just that.

1. Try to work on long-term projects

As you are just starting out your freelance career, you most likely will not have a lot of experience on the projects you are working on. Especially if you are working on something different than what you studied. As a result, it is more likely for you to land smaller, one-time projects rather than long-term ones.

Those types of jobs might be very helpful when it comes to gaining more experience with different employers and projects. They can also help bring more attention and positive reviews to your profile, which will be useful with future employment. On the other hand, though, they aren’t the most profitable and you won’t be able to make a good income through them.

One of the things you can do in order to turn this around and find a more stable source of income is to, first of all, ask for more work from the people you have already worked with. Just because a project has been completed doesn’t mean that they won’t have any other ongoing project for you to work on. This will help you work with someone you already are on good terms with, for a while longer.

If that doesn’t seem to work out for you though, you can always search and apply for jobs which mention they will require a long-term collaboration. Applying for as many jobs as possible, and as close to your personal interests as possible will help you find a job which will keep you employed for longer.

2. Always set a budget

Having a budget on the things you will be spending during the month is probably the most important thing when it comes to managing your finances. Without having a budget, it is a lot easier for you to splurge and spend money on things you don’t really need.

There are quite a few things you can include in your budget which will help you figure out exactly how much money you will be spending every month. Some of these are the following:

  • Your food expenses
  • Your travel expenses
  • A small amount for unexpected expenses
  • Money needed for your bills

These are just some examples of how you can organize your budget. No matter how your finances are at the moment, the better organized your expenses are, the easier it will be for you to know exactly how much you are spending and on what. This will help you figure out the important expenses and find out exactly where you are spending more than you should.

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3. Take care of your business finances

Managing your personal finances from the same account as your business ones can cause you to deal with more than a few issues in the future. First and foremost, you might find that paying taxes will be a lot more difficult to organize than it should be.

Taking-Care-Of-Business-Finances

In order to avoid such issues, it is a good idea to have separate bank accounts for your personal and your business finances. By having the main business account and a separate personal bank account, you can use your business one to collect all your work money from the month and proceed to pay yourself a salary in your personal one.

Not only will you be able to keep better track of your finances, but you will also be able to save a lot more money in the long run, since you won’t have to use the business account for your personal expenses during the month.

4. Pay your taxes on time

Another financial tip which is always important when it comes to freelance professionals is to always pay your taxes on time. The money directed to your taxes should be kept on your business account and not your personal one. This is important, as you will need to save money for your tax payments, which you will be more likely to spend if you keep them on your personal account.

Managing your obligations on time will also help you feel in control of your finances as well as the work you are doing through freelancing. Paying your taxes on time will truly help you feel like you have your finances under control.

5. Try out online bookkeeping software

If you find that it is difficult for you to keep track of your expenses and income on your own, you can always invest in trying online bookkeeping software.

While this might be new to you, it is actually a safe, inexpensive and easy way to keep track of your finances. The only thing that it will require is some time to get to know how the software works as well as some time in order to organize your finances each month.

Through this online bookkeeping software, you will be able to connect your bank accounts and see exactly how all your transactions happen every single day. You will only have to make a one-time purchase and this will allow you to keep track of your payments, bank transfers, and all other financial movements without a lot of effort from your side.

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6. Use the help of a CPA

If you’re working on more than one project and have little to no free time for other activities, you might want to consider hiring a CPA (Certified Public Accountant). This person will be in charge of managing your finances and making sure that you pay the exact amounts you need to, without you having to pay anything extra.

“Working with a live person who will be able to manage your finances in real time is one of the best investments you can make for your small business,” explains Tonya Findlay, the chief financial officer for TopWritersReview. “There is nothing that can replace the value of a professional offering you valid and much-needed financial advice and guidance.”

Along with helping you pay your taxes on time, a great CPA will also help you make plans for your future and give you the right guidance towards achieving them from a financial perspective. Investing and saving money might be an issue for you for now, but working with a CPA will help you make smarter decisions and plans.

7. Save money in case of an emergency

Probably one of the most important things you need to take into consideration is the existence of an emergency fund. The main reason about this is because freelance jobs are never secure, and all of a sudden, you might find yourself without a stable source of income, even if you have been working with a client for a long time.

Apart from that, you might come across an unexpected emergency, like a health issue or an unexpected trip you need to make. In any case, you will need to have a certain amount of money which might not always be easy to obtain within a month.

An emergency fund can simply consist of a small amount of savings from your monthly payment and it can be as little as putting away 20 dollars every month. Even by putting those 20 dollars away every month, you will soon be able to gather an amount of money which will help you get out of a difficult situation in case you need it.

Emergency-Money-Freelance-Finances

8. Think about your retirement plan

Different to your emergency fund, your retirement plans should be long-term and well-thought. When you retire, you will want to stop working and simply enjoy a life where you won’t have to worry about making a stable income each month and this can only happen if you make the right decisions while you career in freelancing is still fresh.

A good thing to do is to look into getting insurance for yourself which will help you with the financial procedures for when you retire, along with providing you with your much-needed healthcare benefits. This will take a lot of weight off your shoulders and it will help you continue to work without having to worry about saving up more money for when you grow old, or what you will do when the time comes for you to retire.

9. Work with a milestone payment system

One more thing you should keep in mind in regards to your monthly payments with your clients is asking to be paid with a milestone payment system. For example, if you work on larger projects, your clients will have to submit an agreed amount before you move forward with your project, and you can agree to receive a payment each time a new part of the project is completed.

This most likely won’t be able to happen with smaller-scale projects, but it can be especially helpful for long-term ones. This payment tactic will also help you avoid working with clients who will delay or ignore your payments and therefore help you have better control of your income as well as the relationships you build with the clients you decide to work with.

10. Space out your spendings within the month

Last but not least, another thing you can do in order to keep better track of your finances is to start spacing out your spendings within the month. This might sound a little confusing at first, but it a much easier tactic than you might imagine.

First of all, you should always space out your spendings based on your monthly budget. For example, if you have a 300 dollar budget for your groceries, you can easily space out your spendings by splitting that amount into 1 weekly run to the grocery store, where you will buy everything you need for that week.

Not only is this going to help you rethink your purchases but it will also help you have enough time between buying certain things. This will help you better decide whether you really need something or not and allow you to spend your money more wisely and invest it in development of your business. For example, you might decide that you need to create your own logo to attract more clients or spend money on promoting your services.

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Managing your finances at the beginning of your freelance career

Making your own money can be truly rewarding, especially if this is the first time you are managing your own work conditions and types of projects you take on. Freelancing can help you gain a lot of valuable experience and enjoy a new way of working, which will be a lot more interesting and at the same time less tiring.

Being a new freelancer will allow you to set the right rules in regards to managing your finances and if you take these tips into consideration, you will be able to live comfortably without having to worry about managing your financial obligations.

Which of these tips do you believe will be the most useful to your financial managing needs?

Sylvia-Giltner

Sylvia Giltner is an HR manager and freelance writer. She helps people to write the perfect resume and land a desirable job. Sylvia’s articles have been featured on Forbes, Fast Company, Next Avenue, TLNT and more. Feel free to connect Sylvia on LinkedIn.

 

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