Oh no! Running short of money to pay your bills? Went on shopping till your wallet became empty and now no money left even for buying grocery? Well, these are the common scenarios, in case of freelancers. As a beginner freelancer, you may have no idea that how much income you will earn, how much would be right for spending, is saving important and all other necessary financial aspects. Unlike the traditional employment, freelancers do not have monthly fixed incomes. In one month they can mint money while in another month, due to no projects they might sit empty-handed. Income fluctuation is part and parcel of freelance carrier. In fact, even experienced freelancers go through such peaks and valleys in business. When you calculate, your annual income may look pretty good but as there is no fixed amount which you could get on each project, you may struggle with your regular expenses. Hence to handle this situation effectively, thoughtful budgeting is quite imperative.
Here are few budgeting tips for all the freelancers that will help them to lead a stable life:
To save is safe:
This month, you got a big project as well as big money for the project. So what are your plans? Wish to spend it? If yes, then resist your urge. It’s a human tendency, if we have a lot of money, we feel like spending it but what if next month you have no projects in hand? Hence it is better to save money and utilize it when necessary. Especially, for freelancers where you have no clue about how would be the next month. Unexpected expenses like health problems, vacations etc. may arise anytime, therefore it is better to save money for this purpose too.
Why negligence to insurance?
Most of the freelancers do not pay attention to the insurance. Insurance is actually safety against unforeseen and shattering expenses. Apart from health insurance, you need to have other insurances like life insurance, homeowners insurance, automobile insurance and also if possible professional liability insurance.
Only cash, no credit:
Use of credit card should be strictly prohibited for freelancers. To keep the budget stable, it is best advised that freelancers use only cash or debit card. When you are short of money, it is quite obvious, you will feel like using credit card to meet your expenses but this is a bad choice. It may solve the budget problem for time- being but when it comes to bill payment, what will you do and delay payment would come with interest rate too. Outstanding amount may lead to more snag, hence it is better to avoid using credit cards or else use only if you think, you can clear off the bill within the same month.
Live on less than what you have:
Make it a rule to live on less; it is not only useful as freelancer but also as a person. Living on less always gives you a sense of security. Just because you can afford now, it doesn’t mean you need to invest in expensive car or luxurious home. You can’t predict the market conditions, recession can hit anytime, so it’s better to play safe and live below the lines.
Maintain a budget:
Maintaining budget is a best idea to track your expenses both financial as well as personal. Budgeting will also help you to have a rough idea about how much you should earn to at least pay your bills. You can write down your expenses and income with the traditional pen and paper or you can go for the other smart budgeting software. Many low priced or even free online budget calculation tools are available which you can choose according to your preference. Estimate your monthly budget and limit your expenses, accordingly.
Now there is no need to fidget with budget, just follow the above budgeting tips and lead a steady life with your freelance income.