5 Kick-ass Financing Tips for Freelancers
On : July 3rd, 2014By : Taskr.in
Freelancers are usually so engrossed in their trade that the thought of managing finances goes completely amiss. And what’s the point of working if the result you aimed at isn’t figuring out all that well. Not being a full-time employee makes you deprived of information classified under “financing tips”. So even though being a freelancer is both personally and financially rewarding, managing all the spoils of the job is a wee bit tougher than you imagined. But you don’t need an MBA for figuring the deals out by yourself. So sip some coffee and settle down. A couple of financing tips here and there, and voila you can make the best of what you make.
1. Track Everything
Make sure you have separate accounts for your personal and business spending. Start-ups usually have an entire accounting department, to keep track of their revenues and expenses. But as a freelancer you got to multi-task and figure out the whole business deals by yourself.
Categorize everything (no not the pretty designer dress you just bought to meet a client) appropriately and submit your tax write-offs timely. Make sure you can keep track of all your expenditures and can highlight areas of waste. (curb them, you had that reminder coming) Basically, just make sure you have a tab on all your expenditure right from the beginning of whenever you started. Compiled and filed separately, logged in regularly. Because, without that there is no management. And you need to start that now. You can use sites like mint.com (quite the favourite) that help you visualize all your finances online with ease. They even help you analyse and lead you to alter (and optimize) some of your decisions.
2. Build your Lego House
‘Freelancer’ the term itself claims that at one time you could have a ton of work but at some other point you might end up a little loaded with assignments. So that you can party, right? Um no, the flow of steady work might pause for a while. And you need to be prepared at that point of time. Don’t neglect those advertisements that urge you to keep saving and always have an emergency fund ready. It’s not just what you filled away in the bank, you need to stop living like a mayfly and have satisfying finances in times of distress.
3. No Relax on the tax
You’d think they’d at least leave us freelancers out of their tax webs. So when you were trying to fathom how to save for the future, apparently you need to save for the ensuing tax too. You have to pay a self-employment tax in addition to your regular income tax. Yes so much for self-employment. It’s about 20% of your total earnings or variable depending on where you live (so yeah, explore), but they take quite a fat slice of your plate which you need to preserve and not bust. Consult some experts in this field and make sure you know what you want to know, so that you can handle your finances without missing out on your taxes. Also write down your business expenses and save the receipts. You can seek lowered taxes by claiming these receipts as deductions. Another something, you can look up with some expert in taxes. It’ll guaranteed help you save quite an amount of money, trust me.
4. Get Health Insurance
Unless the plan is to live fast and die young, you need to take this seriously. You sure can live at whatever pace you feel like, but the whole concept of dying should be way in the future. Or else, who is going to rate my blog? Ok, not funny. But the crux of the matter is, you are earning and you need to pay for your own health insurance. Make sure you research this well. Check with other freelancers and research your health insurance options well. With so many policies floating in the market, you are sure to find the plan of your choice soon. Just avoid falling for something that is not the best, in a hurry. Find the plan that covers all your needs and fits well in your budget. Take your time, mull over your options, compare them well and then invest.
5. The debt is unpaid
I was going to make a pun about going to Davy Jones’ locker if the debt is not paid. But I think I need to control my super weird sense of humour. For your health’s best, you know. So anyways, just like any normal person in the 21st century you are sure to have a few debts that you are yet to pay. Always stay updated as to where and when you need to pay and save up for whatever you should be saving for. Prioritize. Save. Utilize. Sounds so easy now that I say it here, but not so easy when you need to actually save up for debts. Don’t ignore debts and pay up before its too late!
Are you doing all right?
Okay, so even though after separate reminders about what is to be done and how it is to be done; can you put it all together with finesse? Without all of it being managed together in one log diary; managing these finances will be a hopeless task. So let’s summarize all the financing tips yet in a nutshell.
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You need a living account, which is your personal and living biosphere provider. This is what you work so hard for.
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Then the tax account that receives 20% of your total earnings every month so that you can deposit it at the end of the year to pay your taxes.
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Next is the retirement account that comprises of your health insurance and money for the trips in the distant future etc etc.
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Then the emergency fund, for in times of distress or your car breaking down or some unplanned expenditure that you might have.
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And last of all the ‘Save till you spend account’. Come on, you are a freelancer and sometimes there is the chance of more work and hence the onslaught of more revenue. Don’t spend it all. Save it for the future or when you really wish to splurge.
As a freelancer you may have to focus a little on financing tips, but managing all your money, it’ll be worth it.
