The freedom that comes with freelancing is second to none given that it presents people with a golden chance to be their own bosses. Nevertheless, this doesn’t come without sacrifice reason being one has to say goodbye to employee benefits. There is also the risk of income being unpredictable thus putting you at risk of being shackled by debt. In this write-up, we will delve deep into how to manage finances as a freelancer.
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.
When exploring the world of freelancing, it is important to always work with budgets. This is something that lots of freelancers think of as arduous but it is doable. Buying things that you need in addition to doing away with bad debts associated with accumulation of interest is advised the moment you receive payment. Securing a better future during your old age by saving for retirement would be a good idea. An emergency savings account also comes in handy in a number of occasions – you should however refill after withdrawing.
This probably goes without saying but giving the taxman his dues is of great importance. There is no doubt that taxes can be a convoluted affair particularly 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. The taxman has clear set guideline for freelancers and you will be doing yourself some good if you learned more about them.
Research shows that a good number of freelancers are not insured. This is definitely something dangerous as the person is likely to have fiscal distress if they got afflicted by a medical condition. 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 is a good idea to always check if you are being paid an amount that is commensurate with your services. 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.