5 Financial Management Tips to Help Freelancers Avoid Debt
Freelancing has many perks, for one thing, you get to do what you love on a schedule that best suits your needs. This is why so many people are freelancing today. However, freelancing comes with one risk: the unpredictable income stream combined with poor financial management practices can result in debt. Fortunately, this situation can be avoided. Here are some tips that can help you:
Organize Your Finances
It’s important to get a handle on your expenses, including your monthly fixed costs for things like rent, utilities, and discretionary spending. Be sure to price your services correctly. These steps are critical to creating a budget. When you know where your money is going, you’ll be able to set realistic goals regarding what you need to earn or choose areas in which to cut back your spending.
Fortunately, there are a lot of great budgeting tools available to use today. Before you start using them, though, you should download your banking information, including expenditures. Take a good hard look at your finances so you have a better understanding of what you’re spending.
Create an Emergency Stash
Life is unpredictable, especially when you’re working as a freelancer. You never know when you’ll need your rainy-day fund. To make sure that you have funds available when you need them, set aside some money each month. Create two funds: one paying bills when business is slow and the other for unexpected emergencies.
While it’s important to have an emergency fund, it’s equally as important to have good insurance for when a serious illness or accident occurs. Even if your insurance plan has a high deductible, it’s still essential to have an emergency fund so that you don’t go into debt over medical bills.
If you’re the head of your household, you should also consider getting disability insurance. Unfortunately, most freelancers overlook this insurance, but it is an important part of good financial management.
Curb Impulse Buying
In the age of social media, it’s challenging to overlook all the great trips and gadgets our friends are enjoying or all the ads for the best new products. You may feel inadequate when you are constantly bombarded by these things. Freelancers may be socially isolated and spend a lot of time online, making them more vulnerable to this feeling. But if you want to remain debt-free, you must do your best to resist the urge to sho.
The best way to handle this is to be realistic about both your spending and the time you spend on social media. Of course, this doesn’t mean that you can’t ever splurge, but don’t make it a habit.
Remember Your Taxes
As a freelancer, you’re unlike other employees in that no one will withhold your taxes for you. Instead, you must anticipate and pay your own taxes quarterly. If you want to remain debt-free, you’ll think of this well before your taxes are due. If you do not pay your taxes on time, you’ll incur fines. To avoid this, set aside money from each paycheck money.
If you are struggling with your finances and need some help getting some relief, reach out to Bartifay Law today. We ensure you that our law practice will provide you with suitable financial management advice. We are here to help!