How To Manage Finances As A Freelancer
Being a freelancer comes with lots of freedom considering that you get to be your own boss. Even so, this comes at a price considering that you will never gain from employer benefits. There is additionally the added risk of having unpredictable income meaning that you run the risk of sinking into heavy debt. In this article, we take a look at financial management tips every freelancer needs to know.
The need to track finances cannot be overemphasized. You are required to monitor the amount you earn within a given amount of time. Regrettably, many freelancers do not have the slightest idea of the money they make on a monthly basis. Having a record of your finances by your side helps you avoid running broke given that you will be amply prepared for high and low season. As a way to stay more organized, you can choose to use a 457 calculator.
Creating a budget is something every freelancer should do. This is actually doable despite many freelancers thinking that it isn’t. Once you’ve got your payment, it’s a good idea to purchase necessities followed by clearing any bad debts so as to prevent buildup of interest. It is on the same note that it is essential to save for retirement to ward off trouble during old age. Saving for emergencies is also advisable and this should be replenished anytime you withdraw.
You probably saw this coming, that it is important to put aside some money for the taxman. Taxes can be a tricky matter and it doesn’t get any better as a freelancer. While an employee has his/her taxes paid by the employer, a freelancer is supposed to make payments by themselves. You therefore need to know your annual earnings and if you have no idea about this, you can always use last year’s returns as a guide. Remember that there are freelancing tax regulations in place and it would be prudent to learn more about this.
According to research, a considerable percentage of freelancers lack insurance. This is perilous in light of the fact that if a medical emergency was to pop up, the individual would be in for a hard time. There are several options offered by government not to mention you can also opt for private insurance. Experts advise that a health savings account will make sure that you are always able to pay for your health insurance cover.
It is a good idea to always check if you are being paid an amount that is commensurate with your services. Inquire from other freelancers with your level of experience to learn of what they charge. If your rates are low, it is perfect time to revise your pay upwards.