Freelancing sounds to be a very tempting trade. If you get it right, then it’s not just rewarding but also convenient. The perk of being your own boss and working conveniently from your own place can be really fascinating in a tier of a rat race.
Freelancing has been gaining a lot of popularity among millennials. The idea of it might sound excellent but it won’t take long for it to go wrong if not carefully implemented. As a freelancer, you have full power over your professional life. But as it is rightly said, with great power comes great responsibility.
Freelancing comes with its own share of worries. The work comes in a lot of high and lows, sometimes it’s a high mountain and sometimes it goes like steep slopes.
Such an inconsistency often lands a freelancer in a unique financial situation. Some days, the currency is overwhelming while other days, it can get difficult to make both ends meet. It’s not easy to live a life with no fixed income but it’s not impossible either. With careful planning and a sharp foresight, one can very much overcome the rainy days in their trade and even excel at it!
So, if a situation like this sounds familiar to you, then here are five tips that might come handy if you’re looking to budget your life as a freelancer.
1. Watch your expenses
If you want a balanced financial life as a freelancer, then you need to keep a check on your expenses. It is of utmost importance to have a budget and more importantly sticking to it.
It is easy to stick to a budget when you are keeping a check on it. Start by maintaining the record of what you are spending it on. Track all your expenses. The fixed ones and the flexible ones too. Keep a check on the essentials and the non-essentials so that it is easy for you to cut down spending on them in times of crisis.
2. Follow the 50/30/20 rule
Working as a freelancer at times is similar to the work style of an entrepreneur. So, it will be wise to follow the 50/30/20 entrepreneurial rule if you wish to save on your finances.
According to financial experts, this rule is very effective to attain financial stability where one does not have a fixed income. The rule suggests to live on 50% of your income and the other 50% of the finances should be divided in a 30/20 proportion, where 30% goes out for discretionary expenses and the 20% is left down as savings.
If you proportionate your earnings in such a ratio at the beginning of the month and are successful in following it, then bad days will seem to pass in a blink of an eye!
3. Save for a long-term goal
Savings are always an essential part of any kind of earnings. While freelancing is more like living in the present, it is always advisable to have a future plan as well. Freelancing is a wonderful gateway to invest in any long-term goal you’ve always wanted to achieve.
As a freelancer, you have the liberty to earn via multiple sources and subsequently increase your earning according to your needs. This gives you an edge to earn more than required and an opportunity to save for future investment.
Don’t adapt yourself to the habit of living hand to mouth, instead be discretionary about your expenses as it will definitely yield profitable results in the long run.
4. Keep emergency funds
You might be excelling at freelancing! Everything seems to go perfect and smooth. You are winning at every project and nailing it at every opportunity you get, but you should never be ignorant of the dry period.
You need to be considerate of the fact that as a freelancer, you have no financial protection to hover on in times of crisis. So, the first thing that you need to do soon after getting started with freelancing is to open an emergency savings account. You never know when the work dries up or when you come across an ugly unprecedented situation. Thus, you need to have something to fall back on!
Always leave a little share of all your earnings in your emergency fund. Make sure to strictly follow this ritual as it will rescue you in times of accidental emergencies. After all, spring is the season to get prepared for chilly winters.
5. Don’t be a spendthrift
Last but not least, don’t be a spendthrift!
In order to have a smooth freelancing venture, make sure to not go carelessly with your expenses on days when you are floating in money. Do not spend on luxuries or non-essentials in the initial months of freelancing. Develop a minimalist perspective if you have a big long-term goal.
You need to understand that you no longer have a fixed income so give up on your habit of being a shopaholic. You are working for yourself and you need to be very honest with it. You have no one to check you for your expenses so you need to be the judge for yourself. Be very wise about your expenses. But in case you can’t give up on your extravagant lifestyle, then adopt other ways to increase your income. Take up more projects, dedicate more work hours, have multiple income sources. One way to shoot up at your earnings is by increasing your freelance rate.
Just be sure that you have a smooth incoming of work and always have something up on the table.
Working as a freelancer is indeed very attractive. With strong financial control and a firm work-life balance, it is one of the best things for those who despise a corporate culture. It gives you a lot of freedom but at the stake of your financial stability. The freelancing market is aggressively growing and it is a great time to become a freelancer.
So, like everything else, freelancing also has a lot of pros and cons. Just be disciplined, have control, be proactive, responsible and dedicated towards your work. With such traits, I believe you are good to go with freelancing.
All the best!