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Being a freelancer comes with a range of benefits; you can choose when you work and the type of jobs that you take on, for example. However, the life of a freelancer is not always easy. In fact, financial management can often be much more difficult for freelancers than it is for salaried staff, especially if you often have a big fluctuation in the amount of money you have coming in each month.
Learning some of the top financial management tips for freelancers can help you stay in control at all times, so you are able to focus on the work at hand.
1. Make A Budget
One of the first steps that you will need to take as a freelancer is to create a comprehensive budget. You should create a monthly budget, that details all of your fixed costs. Once you have outlined the fixed costs you have, it is then time to focus on additional expenditure. It is often very helpful to look back at past bank statements to gain a clearer idea of just how much money you are spending each month.
After identifying how much you are spending on fixed costs and additional costs, you can then assign an amount you intend to save each month. Creating a realistic budget that you will be able to sick to is an essential step when it comes to better managing your finances.
2. Automate Bill Paying
If your income tends to change depending on the work that you are doing at the time, this can make paying bills and sticking to your budget more challenging. This is because it is all too easy to get into the habit of avoiding making payments until your next income arrives; however, this can get you into trouble. Regularly paying bills late can damage your credit score and lead to increased fees. You should use a bill pay service to automate your bill-paying processes.
3. Have a Separate Business Account
As a freelancer, it’s recommended that you make two separate accounts, one for your work finances and the other for your personal funds. Even if it is not a legal requirement for you to have a separate business account, it can make your life much easier. Keeping your accounts separate will help you to stay organized, which can be a real lifesaver when it comes to bookkeeping and paying taxes.
4. Seek Help
Money is one of those subjects that people can be uncomfortable talking about openly, but there is no reason to be. If you are struggling with your finances as a freelancer, then it is important that you seek help. Talking to a professional about your money management can be valuable as it allows you to get into good habits for the future. This will help you to take control of your finances and make decisions that will benefit you now and in the future, and ensure that you can stay in control and choose to work in the style that best suits your preferences.