As the tide turns in the professional world from working in offices to working at home, a lot of people have chosen to simply work for themselves and have complete control over their professional lives. Many people are making a great living off of it, however, without a steady income, you are going to have to find new and interesting ways to budget your money and keep your finances in order. Here is how to manage your money as a freelancer.
Set a Budget
You are going to need to make a certain amount of money every month, and when you have that number, start budgeting around that. It’s the same as when you were making an income from your old job. You know how much you need to make, so set out to make it. If you have your jobs all lined up so that you can make that goal, stick to the budget.
In the world of freelancing, money comes and goes, so don’t start living as if you are going to make this kind of money every month. Things can change. Do your own accounting, keep track of everything, and put some back into your business and keep some for yourself. Know where your money is going.
Demand On-Time Payments
You are running a business and people are hiring you to produce great work. It is well within your right and highly expected that you demand your payments on time. Depending on how clients pay you, you could wait a few days to get paid or have payment of receipt.
Find what method works best for you. Some people pay through an ACH while others may want to send you checks, use wire transfers, pay by PayPal or set up an escrow where the money sits for a bit before you get paid. Learn more about the difference between ACH and wire transfers on this website so that you can choose which option works best for your finances.
Set Aside Tax Money
This cannot be said loud enough. You have to pay your taxes. You are HR now, you have to decide how much money is going to come out for the government, and when you can figure out that calculation, set that money aside every month as the year goes on, so that you aren’t stuck with a huge tax bill at the end of the year.
You are your own accounting department now, be smart with setting aside all the funds you need. This will help you adjust your budget and let you know if you need to change things up to make more money.
There are several other factors that will affect your income as a freelancer. The best you can do is check your money every week to ensure you are on track. The closer you pay attention, the faster you can fix a problem before it arises.
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