Bored with the regular 9–5, you struck out on your own to make it as a freelancer. In leaving behind florescent lighting and water cooler chit chat, you gained a whole new gig way of life. Now, you are your own boss.
You get to choose when to work, where to work, and who you work for. All that flexibility is great, but it can make it harder to manage your money. If you’re struggling to hit your savings potential, check out these tips to keep your money where it belongs.
Hammer Out Your Base Needs
Building a budget isn’t always simple when you freelance. Your earnings may fluctuate from contract to contract, and you can’t always predict when or how often you land a gig. Living within your means becomes that much harder when you can’t anticipate your annual earnings — which is why a budget is essential for freelancers.
A budget shows you the bare minimum you need to get by for things like rent, groceries, and insurance. This is what you need to earn each month to live. By tracking your workflow patterns and spending habits, you’ll be able to see if there are specific times of the year that are typically lean or flush.
You can accommodate these trends by saving more cash during your busy season and cutting spending during slow periods. Your budget will pinpoint spending habits that limit your ability to save. They’re often tied to emotional triggers that convince you that you deserve to splurge on takeout, clothes, or tech.
Switch To Business Banking
When you’re just starting out, you may not feel like you’ve earned the title of Business Owner yet. But you have! It’s time you organize your finances like you have, too. Don’t automatically open an account with the bank you use for your personal finances. It may not provide you with the right options, so you should shop around for a bank account that suits your business needs as a freelancer.
Don’t be afraid to look at local banking alternatives, like a credit union. If you join, you access all the typical products and services you expect from a Big Bank — including new business loans and credit cards. A credit union business banking specialist can also show you there are better ways to manage your money. Shop around to find one that customizes their products and services to your unique needs.
Wherever you go, it’s essential you keep your personal accounts separate from your business finances. This helps you keep better track of your annual expenses, and it will save you a lot of grief once you file your taxes.
Save For Taxes With Every Invoice
Few people enjoying filling out their taxes when they’re gainfully employed. But as a freelancer, tax season adds to the stress and challenges you face. Unlike your old office workmates, you don’t have taxes or other deductions taken out of your paychecks. This is something you have to do manually by charging taxes on your invoices.
But that’s not all you should do. In addition to getting your clients to pay the taxes on your work, you should match them with your own contributions. As a general rule, you’ll want to save roughly 30 percent of your earnings to account for taxes. Shelter this cash in a dedicated savings account and resist dipping into it for anything but the Tax Man.
Become A Freelancer Money Management Master
You wouldn’t change being a freelancer, but that doesn’t mean you won’t face challenges as you jump from contract to contract. Being financially prepared is the best way to face these challenges head-on. Sort out your budget and start saving for taxes properly. Once you manage your money with confidence, you’ll find it easier to focus on the work that makes it all worth it.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.