Money Bite-Size Read:
- More of us are going freelance to earn money.
- There are benefits to going freelance, including owning your time.
- Here’s how freelancers manage money and don’t go broke so that they can afford to freelance and pay their bills.
The Money Bites Take:
If you want to go freelance, it’s essential to think about how you’ll earn and manage money, without the guarantee of a regular pay cheque.
Have you ever thought about going freelance?
It’s the freedom not to be chained to an office job that pushes many of us to consider it. While the idea of working from the poolside isn’t always accurate, there are benefits to owning your time.
The number of freelancers in the EU doubled between 2000 to 2014.
The increase is also a trend in the United States which saw the freelance workforce grow three times faster than the overall workforce. If you’ve lost your job, freelancing can be a great option to earn money while you look for work.
The disadvantage of freelancing is it lacks the security of a steady pay cheque. That means the pressure is on you to manage the money you earn to pay your bills.
Here’s how freelancers manage money and don’t go broke:
1. Be confident in your style
Identify your individual strengths and market your unique skillset. Of course, you won’t be right for every potential client, but it’s important to recognise that you’ll never please everyone.
2. Don’t be afraid to increase your prices
As you improve your skills, you can increase your prices accordingly. It’s important to do this gradually over time so that you can keep pace with the market.
3. Always secure a deposit
Many freelancers will tell you a similar story of having to chase clients to pay their invoices. Securing a deposit at the outset of a project means clients are more likely to pay up later.
4. Learn to say no
I’m often asked to give people my time for free or in return for exposure. Please recognise that exposure doesn’t pay the bills, and don’t be afraid to turn down the more tone-deaf requests.
5. Build an emergency fund
The difficulty of freelancing is not having a secure pay cheque each month. Have an emergency fund to cover your bills, so you’re not worried when clients don’t pay their bills on time.
6. Know your tax situation
Anyone who earns money, including freelancers, will likely need to pay tax. Make sure you keep your invoices and receipts as records so that you can submit an accurate tax return.
7. Document client conversations
If you agree to a price and scope of work with a client, put it in writing. Sending this to a client means you have a record of the conversation, and you’re both clear about what you’ve agreed to.
8. Know where your money goes
Freelancers need to know how much it costs to them each month. That requires learning how to budget as it means you know how much you need to earn to cover your bills.
Freelancing offers the opportunity to own your time.
By knowing how freelancers manage money, you can take the guesswork out of paying your bills. That makes freelancing a more economically accessible lifestyle option and less scary to step away from the safety of regular pay cheques.