Whether you’re a digital nomad reading this from a beachfront hostel in Bali, a tech-trepeneur hot desking in the city, or a resourceful side hustler building a business around your day job, one anxiety is universal: financial insecurity.
The promise of managing your own (hopefully abundant) revenue is just one of the many exciting reasons to tread the freelance path. As with all routes navigated alone though, there will be forks in the road. Make the right choices from the beginning and increase your chances of reaching your destination, the bounteous thrills of success and financial security. Choose the wrong path? Financial treachery, and potentially the loss of time, money, and even your business may await.
No pressure, right?
But remember, working alone doesn’t mean never asking for help! And you’re in the right place. Our top tips for freelancers are here to guide you on your path to financial security.
Examine Your Expenditure
Ideally, you’ll do this while your dream is still just that. But if you are coming to this with a business into motion, do not fear! Working through this now will futureproof your finances, inform your investments going forward, and protect the hard work you’ve already put in.
Build a spreadsheet covering at least the past three months, detailing your income and expenditure in full: everything from your water bill to your morning coffee; your wage from your day job to the $5 you made selling an old sweater on eBay. This will help you to identify superfluous expenditure and – crucially – how your finances will fare during those early freelance months where income is limited, or even nonexistent.
It’s good practice to keep this going throughout your freelance career too. An hour a month keeping up with your personal finances could save a headache later. It’s important to always know how you will survive should a couple of invoices go unpaid – even after years of building your own business!
Blitz Your Budget
With that sexy spreadsheet to hand, you can build your budget. Remember: as a freelancer, you are your business. Categorize critical versus luxury spending. This will help you out in the early days, when your income streams are just a trickle, and down the line when they inevitably fluctuate too.
Your business might not survive without that website upgrade, but perhaps you can do without a swanky redesign for now. Likewise, if you’re working on the road and a major client requests an invoice extension, could your next digs be a friendly hostel instead of a fancy hotel room? Your budget will lay all of this out and help you navigate it even when things get stressful.
Don’t forget that impending tax bill too! Accounting for this, and putting the money aside now, is crucial to protecting yourself.
Spend (and Save!) Sensibly
As a freelancer, you lose out on lots of the benefits of employment. Life happens. What if you get sick, or can’t work due to maternity or bereavement? Even smaller outlays, like fixing a broken washing machine, can be a nightmare at the beginning of your freelance days if you’re unprepared.
While it can be tempting to use credit, be warned: this is always a risky venture. You can never be sure when you’ll be able to pay it off, and that’s before the interest that only makes your debt accumulate faster. If you’re already in debt, prioritise paying off high-interest loans first.
Before you set out building your business, then, you’ll ideally have built up an emergency fund to help when things get tough. It’s important to set up a retirement fund now, too. If you’ve not done this? There’s no time like the present to start. Amend that spreadsheet to include these non-negotiable monthly savings. You’ll thank yourself for this down the line.
Present Yourself Professionally!
To build a rewarding freelance career you need to know your worth, and demonstrate it to clients too. Don’t undervalue your offering, but remember that you can negotiate, then increase your pricing over time as those positive reviews roll in and your reputation grows.
And never neglect your contracts and invoicing! Ensure your contracts are binding, and your invoices are efficient. Remember, clients will rarely pay instantly: invoicing promptly protects your income streams, and keeps your budgeting accurate. Reputation is everything: these steps build your credibility and reliability, which helps you to attract new clients, diversify your income streams, and make your position less precarious.
You’ve got this, freelancer. Work hard to map out your finances now, keep some money aside for the future, and prepare for the rollercoaster that is unpredictable income streams. Enjoy those bountiful months, then breathe through the stressful times, safe in the knowledge that you are prepared for this.
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