This is a contributed post.
In the digital age that we live in, so many more people are working freelance than ever before. And many are making more money than their full-time counterparts.
But why do so many freelancers find it hard to stay afloat? Often it’s because they work fewer hours than a full-timer would, even if they earn more per hour.
But it can also be down to not managing their money well. Income isn’t always as regular when you’re a freelancer so it can be hard to know week from week what money you will have in. So here are some essential tips for freelancers to better handle their finances.
Arrange Milestone Payments
The nature of freelance work means that it can be hard to know when payments will be made. Even when you put a deadline on things, invoices can still be delayed.
So one way to take some control with it, and have an idea of what money you expect and when, is to arrange milestone payments with your client. That is basically saying that you won’t carry on with the work past a certain point, if a part of full payment isn’t made.
If you have a year long contract, for instance, then you could set up milestone payments every couple of months. If it doesn’t get paid, then you shouldn’t be doing more work for them until it is.
Get Insurance
When you work freelance, there is only you. So unless you’re an expert in all areas that you need to be as a freelancer (admin, legal, accounting, and taxes, for instance), then you may need to insurance to back you up in the future.
In case of any disputes with clients, a site like https://www.qdoscontractor.com/ shows that having personal indemnity insurance can help you. Just make sure that when you’re getting a quote, you have fully explained the kind of business that you do, so that you are covered for your work.
Set Tax Money Aside
Ah, January. The time of year that all freelancers and self-employed people can dread.
Why? Because it’s tax return time! If you haven’t been working out your tax and setting the right money aside each month, then it can really add up.
And you do need to pay it in full to https://www.gov.uk/. It will make a massive dent in your finances if you haven’t been planning for it. So I can’t stress enough how important working all of this out is.
Make a Budget
On a similar note, having a budget for yourself is really important as a freelancer.
If you don’t know what money you have coming in each month, and you just spend willy-nilly, then it can lead to financial trouble. So plan your basics; rent or mortgage, groceries, and bills. Then plan what work you need to be doing to cover that amount.
If you have any extras, then save or spend accordingly. So set a budget and perhaps some savings goals. Then you can dip in and out of it when you need to.
