For any professional, going freelance is exciting. You get the freedom and flexibility to set your own terms and work your hours. However, these benefits can sometimes pose unique challenges. One of such challenges is the sustainability of finances. A freelancer does not have a fixed income. This means that on some months, there will be more income and on others, there will little. This makes it paramount to include financial planning into the equation if you want to stay afloat as a freelancer. Here are top tips to manage your finances while bringing in more income.
Staying Afloat on Your Income
Build Back-Up funds
In your early days as a freelancer, you will have to live with not knowing where your next paycheck will come from. The anxiety dissipates as you build a steady stream of clients but there are no guarantees. Having a back up fund is important if you must survive lean periods. With back up funds, you can pay your living expenses and keep your freelance business going until your cash flow is back to optimal levels. Additionally, back up funds help you avoid shortchanging yourself in a bid to just bring in some cash. When you are facing financial stress, there is the risk of accepting projects for an amount you would ordinarily ignore. Back up funds ensure you can stay more relaxed as you pursue worthwhile opportunities.
You cannot track your finances as a freelancer if you have funds going into one account. You need to have a separate account for your business. It doesn’t have to be fully business accounts. Any bank can allow you open multiple accounts. Do a comparison and choose any account types that appeal to you, open them and label appropriately. This way, you will be able to easily know what goes where when it is time for budgeting and bill payments without jeopardising your business.
Talk to an accountant
A good accountant will not only help you keep your finances in check, you will also save time on financial analysis (such as tax returns) while staying focused on what matters: hitting deliverables for your clients. Here is more on why you need an accountant.
Automate your finances
By automating your finances, you can pay your bills, deduct savings, pay your taxes and fulfill other financial obligations. This approach saves you more time than treating each one on a case by case basis.
How to Maximise Your Freelancer Income
To increase your income as a freelancer, here are top things you should do:
- Meet delivery targets to encourage quick repeat business.
- Offer discounts for customers that pay above a certain threshold.
- Display your skills at any given opportunity. Your freelance business is no different from other businesses that need consistent marketing and networking to excel.
- Increase your online presence. This is even more important if your freelance business is digitally based. Your target audience is online. Put your freelance business in their face as much as possible. From blog posts, to steady social media posts, there are lots of ways to do this.
- Avoid time wasters.
- Sub-contract the least productive work.
- Focus on building credibility. Here is how you can achieve this.