Categorized | Advice

Manage Your Freelance Income

Posted on 25 October 2008

Living as a freelancer is often a “feast or famine” situation. Either there is no work or too much work! While juggling a changing workload, you also need to learn to juggle your finances.

First, having 3-6 months of living expenses is essential for any freelancer. This may seem like a large amount to come by, but if you take a small portion of each check and deposit it into a separate account, it will add up.

Second, resist the temptation to blow a big paycheck you receive on steak dinners, jewelry and other non-essentials. Remember, you have to figure in taxes, to federal, state and local. To reduce the sting of a huge tax bill, send in estimated tax payments every quarter.

Third, write up a budget. This should include groceries, electric, water/sewer, credit card payments, school loans, etc. To make sticking to your budget easier, consider putting cash in separate envelopes marked, “Groceries”, “Entertainment”, etc. This is a good way to force yourself to only spend what’s in those envelopes. Also, if you find you overspend at the grocery store, leave the checkbook and credit/debit card at home and bring cash only and a calculator.

Fourth, get frugal! While your business may be doing well overall, being frugal, especially in the current recession, will help down the road. Clipping coupons, sending in rebates, shopping by sales, using online promotion codes…these little steps can add up to big savings.

Fifth, what are your financial goals, besides making the bills every month? Are there bills you want to pay off? Do you need to save for your child’s college education? What about retirement? Every time you get a freelance check, consider the big picture and put something aside for those goals.

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1 Comments For This Post

  1. Resume Tips says:

    Number three, “write up a budget” is a good way to curb spending, but it is also an excellent way to determine how much you need to earn each year in order to stay afloat. Remember, as a freelancer you have to consider everything that you have to pay for – not just household expenses. You have consider overhead, health benefits, vacation pay, savings, retirement and taxes as well as any time you have to spend on marketing activities, performing accounting tasks, and any other unpaid work!

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