Personal Finance Tips for Freelancers

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1 year ago

In order to create a financial plan, you need to be financially intelligent. Financial intelligence means you have the skills and knowledge to manage money. Managing money means, you know how to handle the cash flow. Clash flow means the money that you earn and the money you spend. The basis of managing your money is using your income into three different categories in the ratio of 50:30:20 ratio, where 50 stands for 50 percent of your income, which is for your necessities such as groceries, rents, fuels, debt, bills, etc.; 30 stands for 30 percent of your income which should go for your wants such as clothes, vacation, new gadgets, etc.; and 20 percent for your savings. You can start by saving in banks and once you have a substantial amount, you can use that money to invest in the stock market, government bonds, etc. This is how I manage my finances.

How to Manage Money as a Freelancer?

If you have a job, you will receive a paycheck regularly.

If you have a business, there will be a continuous flow of money.

If you have a job or a business, you will have a regular income and you will be able to manage your life quite easily, even if you do not have funds to pay for certain things, you know the date when money will arrive and you can buy that thing once money comes to you.

When you have a job or a business, it is easy to build emergency funds, investment funds, normal saving funds, etc. because you can do proper budgeting because you how much minimum amount you will receive.

However, being a freelancer is something different. You will not always have assignments, which means you will not be earning money regularly. In some months, you might be busy for the entire month working on various projects and in some months you might not have enough work. When you have too many works, you make good money, when you don’t have too many works, you don’t have enough money.  In the month, when you don’t earn enough, you will not be able to pay the bills.

So, how do you deal with the financial problem this kind of lifestyle will bring?

Personal Finance Tips for Freelancers

Being a freelancer is different than being on a job or having a business. Freelancers do not have a regular supply of money just like a job holder or businessman. In some months, a freelancer might earn a lot of money, and in some months he might not earn enough. Therefore, as a freelancer you need to take care of your finances, otherwise, you will end up being broke or in huge debt.

Buy a life insurance policy:  There is no one to give you retirement benefits but you. Therefore buy an insurance policy. Think of your insurance policy like a retirement fund, it will continue to build up as long as you pay the premiums until the maturity period.

Save money in emergency funds: If you earn a lot of money in a certain month, make sure to add as much money as you can to your emergency funds.

Minimize your expenses: If you don’t earn enough money in a certain month, minimize your expenses for that month.

Do extra work: Don’t depend on freelancing gigs, try to build multiple sources of income. Let’s say you are a writer and you offer writing services. In order to leverage your income, you can start publishing books under your name and earn royalties from your book.

How to Build Multiple Sources of Income for Freelancers

Being a freelancer is a very interesting life. You are your own boss, you can work whenever you want, you can work from wherever you want. Everything is perfect except, your finances.

If you are a job holder, you will receive x amount every month and you will be able to plan your lifestyle accordingly. However, as a freelancer, you don’t have a fixed income, sometimes you might not reach your target and you might not be able to pay your bills. One of the ways to solve this problem is by building multiple sources of income.

So, as a freelancer how d you build multiple sources of income? Here are some ideas.

If you are a graphic designer, apart from selling graphic designing services, you can also sell templates, design bundles, digital art, NFT, and courses on graphic designing. You can even create designs and start selling your designs on various products through the print-on-demand method.

Let’s say you are already into all of these things, now, how do you leverage your income?

Join social media platforms. Since you can create videos images, and graphics, share them on social media, and monetize your activities.

Or, what about learning different skills so that you can do different things and make additional money? Try learning new skills to earn better.

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Comments

Speaking from experience, having an emergency fund kept aside is really important and is something everyone should have. There was a time I had some losses in my trade, it was these extra funds that actually saved me back then.

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1 year ago

So ate saan ka po nagfrifreelance ngayon?

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1 year ago

Accurate, apart from your job you must also invest your many especially if your income is seasonal. I also wanted to be freelancer, but does a laptop is needed for the job?

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1 year ago