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Freelancing, no matter the industry, is an exciting opportunity for working professionals so it’s important to understand How to Organize Your Finances as a Freelancer.
With the excitement comes the challenge of managing your often unpredictable finances and your working schedule.
Budgeting can be challenging for many under normal standards. Adding freelance responsibilities is an extra step in the process.
Finding the balance between spending and saving is essential if you’re working outside the standard nine-to-five workday.
Organizing your finances as a freelancer takes time and diligence, but if you’re successful can help make your work more rewarding.
Here are our tips for money management for today’s freelancers.
Build Your Budget
It may sound simple, but budgeting is the first step to having more control over your finances, especially if they’re changing monthly through various freelance projects.
Your budget sets the tone for your monthly spending and allows you to clearly see where your income is coming from and how best to allocate your capital.
Finding the right budget tool is essential.
Today’s professionals prefer budget apps for their convenience and user-friendly capabilities.
If you’re on the traditional side, a simple spreadsheet can still help you plan out your income and outgoing expenses.
If you find yourself with a temporary cash shortage in the early stages of budgeting, you can borrow money online in Canada to help alleviate your immediate stress and help you get back on track.
Save Any Excess Income
One of the benefits of freelancing is the ability to pack your calendar with exciting projects and earn extra money.
When this occurs, setting that money aside is an effective savings tool.
Thanks to your budget, you’ll have a general idea of your monthly income.
When you add any additional projects into your schedule, set that money aside into an interest-generated savings account.
This way, if you have a month with fewer projects, you have the money you need to supplement your essential expenses.
Know Your Expenses
When you’re working with flexible income, you may not have the freedom to spend the way you would with a steady paycheck.
At least not in the first few months or even the first year as a freelancer.
Instead, be firm with your essential personal expenses — food, utilities, rent are non-negotiable and should be prioritized.
And its equally important to understand what a small business shouldn’t waste money on.
Items such as entertainment or dinners with friends can be budgeted according to your financial capacity.
Create a Rainy Day Account
Whether you’ve been freelancing for months or years, you’ve likely learned how unpredictable the workload can be, which is why a rainy day fund is essential.
This will likely be a separate account from your general savings and should only be used if an emergency arises.
Often it’s an urgent repair inside your home or apartment, expected medical expenses, or anything that you had not budgeted for but requires immediate attention.
And finally, you’re making the leap to freelancing or you’re experienced in the field, organizing your finances is essential to maintaining your career long-term.