There are a lot of advantages of being a freelancer. They are not frustrated with their career because they are free to accept jobs at their own disposal.
But it is common knowledge that a freelancer’s life is not stable. Not only do they have an irregular income but they also have to meet emergencies with that uncertain cash flow just like everyone else. It becomes very difficult to meet the expenses sometimes, let alone saving money.
Regardless, we are about to discuss the best way to manage freelance expenses in this article:
Calculate not only your income, but also your expenses. The best way to better manage freelance expenses, use the numerous calculator apps out there to make it easier. Set aside a particular amount for spending in each category.
Once you calculate your monthly expenses, you can be sure how many projects you need to complete in a month to meet your expenses and even to save money after that.
So even if there is not a constant cash flow, the harmony of your finances won’t be disturbed.
2. Prioritize saving money
No matter what happens, it is important to manage freelance expenses to be able to save money for unforeseen emergencies and also for the future. Begin by promising to save a certain percentage of your income, say 20%. And overtime, this amount will become huge.
In the months you earn more money than the others, raise this boundary to 50 % to cover up for the months you will earn less or negligible. The amount thus saved can be kept safe for the future.
The best way to save money is to invest money. Investments can be big or small depending on how much we earn. For the purposes of this article we will assume it to be decent if not too much.
You can invest as small an amount as 10 USD into fixed/recurring deposits and still get returns. Investments also take the form of bonds, stocks, property, and annuities. If you have enough money, you can invest in these to keep the cash coming in the phases we run out of work.
4. Ask for payment in installments
If you are on long-term projects and you can’t just wait till the project is complete to receive payment then ask for instalments to keep the cash flow coming. You can break down the project into significant slabs and take payment after completing each of them. Alternatively, you can charge them an hourly/weekly/monthly fee.
5. Maintain a separate account
Make a separate account for business needs and set apart that amount from your savings account. As you need to withdraw money from this account rather often, no savings will be disturbed and no extra money from your savings will be deducted. You may then add this information into your chosen calculator app to have all the transactions in one place.
The best way to save money is to minimize your expenses. While this is one of the obvious ways to save money, it is also the most basic ways. To do this, simply adopt the minimalistic approach towards your purchases.
If you have newspaper/magazine subscriptions that you do not get the time to read, unsubscribe them. If you take cabs and commute by tube most of the time, you don’t need to buy a car. You can invest money saved after refraining from such expenses.
7. Generate wealth
Money saved is money earned. There are various credit/debit cards and apps offering massive discounts and freebies. You can subscribe to their e-mails and get notified about them.
Additionally you can sign up for the loyalty programs of the companies you end up buying from frequently. From free movie, flight/railway tickets to cab bookings, you will be able to manage freelance expenses. If there are unused/underused and outdated products in the house, sell them.