Personal Finance Budgeting Tips For Freelancers

Working as a freelancer brings in so many great benefits. Aside from the flexibility at work, working as a freelancer also gives you better chances of diversifying your interests. However, most freelancers really find it difficult to keep their finances free from mess and trouble. Because you’re now on your own, no employer’s going to pay for your healthcare, insurance, or retirement. But, don’t have to freak out. Tara Hornor, who writes for Freelance Switches, a website dedicated to helping freelancers stay financially fit, suggests that all it takes is a little planning and discipline and you’re good to having stable finances.

Here’s our top budgeting tips to help you out:

Plan the way you spend your money

Assess your financial flow. You can expect your finances to rise and fall, depending on the demands of the industry, but bills will be there and you’ll have to pay for them whether your income rises high or dips low. Create a long term budget, perhaps, one that will cover the entire year, and then break it down into 12 months. Limit your budget to the minimum and keep your lifestyle as simple as possible. Cover only the barest necessities so you don’t fall under limbo in case your income declines. According to Tara Hornor, one way of determining how to cut your expenses is by rank your cost of living. Start with your basic needs (food, shelter, clothing, health care, education, etc.), cascading down to the least important.

Save for the rainy day

As a freelancer, there’ll be months when the demand for your product or services slows down. Any wise worker will find it necessary to save enough cash to cover up to six months’ worth of living expenses. Open an interest bearing account, perhaps a short term time deposit will do, so your money will earn even a small amount of sum while it remains reserved.

Save for your taxes

Tax bills could be very nasty and, in fact, eat up a huge chunk of your income. Justin Wright, a personal finance guru, suggests allocating a part of your monthly paycheck for tax purposes so you won’t have to suffer the tax season shock. This also serves as a safety cushion that will lessen the impact whatever the IRS may charge you.

Plan for your retirement

Make it a habit to stash away a portion of your money for retirement. Remember, you can’t spend all your life working. You will have to slow down, too, and enjoy your golden years. So, as early as you’re young, think of the best ways on how to invest your money, how much you need to invest and how long should you invest to secure a comfortable retirement.

Get Health Insurance

Working as a freelancer does not give you the excuse from not paying for your health insurance. It’s your safety cushion that will save you a lot of time and money in the long run. You will definitely need it someday, especially when you or someone in the family is sick. So look for the health insurance provider that offers the best deals.

Although many of us think that freelancing is taking the easy way out, the truth is far what we see. The best thing that we could do is maintain self discipline, as well as, work and plan like you would in an office environment. That’s how you are going to achieve financial stability.