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Freelancer Finances: How To Handle Yours

Estimated reading time: 5 mins

The life of a freelancer can be pretty great. It’s definitely one of those careers that a lot of people would love to pursue. It’s easy to get envious of those that are freelance, because there’s a lot of freedom that comes with it. But at the same time, it can be quite unreliable. The money you earn can be really great, but it’s never really guaranteed. Some months you may be doing well, and then others you may struggle. And this can be a sticking point for a lot of people. It can also put you off from going freelance, because you worry that it just won’t be sustainable. And while your freelance income may not be consistent, it doesn’t have to be an area of concern. In fact, there are things you can do to make sure that your income is great as a freelancer. But you do actively have to make this happen.

And that’s the main takeaway that you might like to have about the world of freelancing. Because it really can be what you make it. Sure, there are myths of the poor, struggling freelancers that aren’t trusted by financial institutions. But then, in this day and age, there are also freelancers that are making six or seven figures! And that is the kind of thing you might like to aim for. But to do that, you have to have the right approach.

Let’s explore exactly how you can manage your freelancer finances and make them fruitful.

Setting Goals

First of all, you absolutely need to make sure that you’re setting goals for your freelance work. And this can work in two ways. First of all, you may want to set income goals so that you are constantly pushing the amounts that you’re earning. But not only that, you may have goals for the number of clients that you land or ‘sales’ that you make. Either way, you might want to get these goals in place as a benchmark.

Tracking Your Income

Next, you’ll then want to make sure that you have a system in place to track the income you’re making too. It’s essential that you know what’s coming in – not only for tax reasons, but for your own understanding too. When you have a close eye on your income, you can then make strategic decisions on how to earn more, whether you need to raise your rates, or which clients you might need to drop.

Managing Your Expenses

As a step on from that, you will also need to make sure that you’re taking a look at the expenses you have too. Yes, you will have them, but you will want to make sure that you’re not spending too much and missing out on making a profit. Not only that, but also you’ll want to make sure that you have this all lined up ready for your taxes to be done too. So keep your receipts and make an accurate record too.

Setting Challenges

Another really powerful idea for you here, is to think about challenging yourself to make more. And this can be a lot of fun but also really rewarding too. Maybe you want to take to LinkedIn to source clients? Or do you want to start a pitching challenge with yourself? Really try to make landing more clients and making more money a game, so that it becomes fun and not intimidating.

Trying New Things

You may also want to try and shake things up a little. When you’re freelance, it’s definitely not a good idea for you to just stick to the same old things. Instead, you need to make sure that you get comfortable with changing things up and trying new style of writing. Because when you have a diverse range of skills, it’s much better for you.

Embracing Passive Income

The next thing you might want to do here is take a look at the options you have for earning passive income. As when you’re writing or creating work for your customers, it takes your physical time up. But when you have passive income products, you can make money while you sleep. So think about the downloadable products, ebooks, or courses you could create to start generating money overnight.

Having A Backup Plan

Then, you’re going to want to think about what you can do when things aren’t going so well, because it will happen. There may be times when your cashflow isn’t as strong or reliable as you want it to be – or when clients just aren’t paying. And so, you need to have a contingency plan, such as invoice finance, in place. Just make sure that you know what you can do, when you need to.

Having Savings

To help you with that, and to make sure that you’re covered in general, it’s a good idea for you to have some money behind you. It can be especially useful when you’re learning the ropes to save up. That way, when you start to freelance full-time, you have a comfort blanket of cash to rely on.

Covering The Future

But not only that, you are then going to want to make sure that you are thinking about your future. Because when you’re self-employed, you won’t have an employee pension in place. Yet you still need to really make sure that you’re thinking about the future and what savings you’ll have in place. Take a look at some of the retirement plans you might want to consider taking out. Then make this a commitment, as it’s essential for you to have financing in place.

Pushing Your Growth

Finally, you’re also going to want to really own your future growth too. One of the most fantastic things about freelancing is that you truly are in control of your income. If you want to earn more, you can – but you have to work for it. So, do you know where you want to be in five years’ time? Or ten? Work this out, identify how much money you might like to make, and consider the actionable steps you might need to take to get there.

 

About the author /


Simon is a creative and passionate business leader dedicated to having fun in the pursuit of high performance and personal development. He is co-founder of Applied Change, a Business Change consultancy based in the UK. Simon is also an Ambassador for Gloucestershire business. Simon is an Associate Member of the Chartered Institute of Professional Development.

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