Financial Management Skills Every Freelancer Needs To Know
The freedom that comes with freelancing is second to none given that it presents people with a golden chance to be their own bosses. Nonetheless, there is a price to pay given that you’ll never enjoy employee advantages. There is also the risk of income being unpredictable thus putting you at risk of being shackled by 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. Keeping a history of your finances will be helpful in terms of assisting you prepare for high and low seasons reducing your chances of going broke. Feel free to make use of a 457 calculator to keep things more organized.
Creating a budget is something every freelancer should do. This is what most freelancers might view as daunting but the truth is that it is indeed possible. 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. Securing a better future during your old age by saving for retirement would be a good idea. Saving for emergencies is also advisable and this should be replenished anytime you withdraw.
As you had probably guessed, you need to set aside an amount for taxes. Taxes can be a tricky matter and it doesn’t get any better as a freelancer. Having an employer means that he/she takes care of tax matters but in this case, it is solely your duty. 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 numerous options the government offers and there are private insurance covers as well. Experts advise that a health savings account will make sure that you are always able to pay for your health insurance cover.
It’s a wise idea to confirm whether the amount you’re receiving is proportionate to services you’re offering. You can always speak to other freelancers that have your experience to know of how much they are paid. In case you are being under-compensated, then it is the high time that you asked for a pay rise.
Suggested Post: This Site