7 Money Tips for Freelance Workers
There are a bunch of money issues that freelancers face because they are self-employed.
So what should a freelancer look out for when it comes to work, saving, paying and earning on your own? Here are our 7 top tips…
The American institute for small business recommends that small businesses should put away at least 2% of their annual profit for marketing (which might equate to 20% of revenue).
What does this have to do with freelancing you might ask?
Well, I would recommend you keep a similar percentage aside for marketing yourself. Do you have a website? If so, are you doing the correct SEO on it? Are you listed in the right newspapers, magazines and directories? All these questions should be answered “yes” if you are to find the best work; that said, answering “yes” to all these questions costs money.
Putting away sufficient amounts to promote your services will make sure you are getting constant offers of work in an economic climate where customer and client loyalty is taking a backseat to saving money and tightening budgets.
2. Safety Net
Having savings set aside for times when work is drying up is essential.
A lot of freelancers often end up taking full time jobs when freelancing is not providing the desired level of income. However, it is difficult to leave a steady income from a job and this has the potential to put an end to your freelance careers permanently.
It is a good idea for a freelancer to save at least three months’ worth of income and set it aside to get them through the weeks when work is sparse.
A lot of freelancers have to do their own taxes and this can be pretty arduous for anyone without the appropriate expertise.
Many small business accountants will offer specialist accounting services for freelancers and should be able to offer affordable rates. An accountant could end up saving the freelancer money in the long run by allowing them to pay the lowest amount of tax within the law and making sure they are not subject to any fines from HMRC for handing in a careless tax return.
4. Set An Ambitious Income Target
Setting goals makes you more motivated.
Calculate all your outgoings and how much money you need for essentials and recreation. When you have this amount add 25% to this figure; then work out how many jobs you will need to reach this target (after you’ve paid for your marketing and promotion).
This way you will always be working towards having more money than you need.
5. Set An Economical Budget
When calculating your outgoings etc… above make the most economical choices you can. This way, if you achieve the +25% figure or above you will be able to pick and choose where you indulge but never be without anything essential.
6. Set Up Separate Bank Accounts
Money that you need to pay work costs and your own personal finances should be kept separate.
This is important for the freelancer because it stops your work becoming a burden on your life. If you are funding your work with your personal finances then you are not working or earning enough to make freelancing sustainable.
7. Pay yourself a Salary
When work is coming in and things going well you should give yourself a maximum amount you can earn. Give yourself enough to lead a decent standard of life but save anything that has the potential to be wasted.
Any money left over from your maximum ‘salary’ should be invested into your separate work fund account or savings account.
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