How to manage finances while freelancing

One of the biggest challenges of the urban world today is managing finances. While this process is true for almost every individual, the quest for balance is even more for freelancers.

Freelance expenses, like freelance income varies through each month, unlike regular office workers and hence maintaining a balanced yet steady flow of money and keeping a tab on the expenses is of paramount importance. So if you are a freelancer and are trying to look for ways to maintain the perfect freelance income spreadsheet, here we are with a few handy tips to help you out!

Preparing for a rainy day

The main crux of being a freelancer is the complete unpredictability of your income. There are good days and bad. In some months, you might be earning twice the normal amount that you are used to, while on others, the orders might just be trickling in. Add to this a vacation or an unexpected illness, and you know that your monthly income will dip.

That is why it is important to make sure that you maintain a freelance expenses spreadsheet, in which an emergency fund is enhanced every month.

Taxes and other expenditures

Make sure that you are aware of the kind of taxes that you are to pay as well as an estimate of the total amount of expenditure that you might incur. Taxes can often cause nasty surprises at the end of the financial year, which in turn, can upset the overall rhythm of the income as well as the savings that you were expecting.

This is especially true if you had been working in an office earlier as most offices take care of their employees’ taxes and changing into the role of a freelancer can be quite a shock in this aspect. So, even if you have just an estimate at the time of framing your freelance expenses spreadsheet, make sure you include an amount for it.

 Investing in your business

Investment is the last thing on their minds for most freelancers starting out. However, if you want to upgrade your skill-set or tools to be upgraded, this might just add on to your monthly freelance expenses, and hence, it is always better to be prepared for it both mentally as well as financially right from the beginning. Add a few dollars to your fund and account for this in your freelance income spreadsheet to make sure you can gift yourself that software or that course that you know will improve your resume!

Professional and private expenses

For most freelancers, looking to keep a tab on their freelance expenses, the trick of keeping your professional and private expenses separate can take some getting used-to. However, it is not as difficult as it sounds. Make sure you have different savings accounts for both these sides of your life so that you can actually monitor the profits as well as the savings that you are getting for your business. This is especially helpful once your business expands and you need to pay for the work you outsource or the software that you buy.

Being aware of your monthly income

If you are new to freelancing, keeping a tab on your monthly income can be quite overwhelming. There might be countless scraps of work that you have done here and there, which are not accounted for. However, this is certainly not a good practice if you want to take up freelancing as a serious career choice. Keeping a tab on your monthly income, even if it is an average aggregate is important to plan your expenses as well as to decipher and predict your earnings each month.

In conclusion

Planning ahead and keeping a tab on your freelance expenses can go a long way in helping you to make the most of the income that you had always dreamt for!

 

 

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