Need help getting on top of your finances?
From the budgeting basics to seeking the help of a professional, we take a look at the many ways to improve your financial health…
Budget by month
As a freelancer it can be difficult to predict how much money you’ll be earning each month. By taking your average income over the last three to six months you can start to build a realistic budget.
Some freelancers chose the 50/30/20 method – 50% of income pays for everyday bills (needs), 30% is spent on things you enjoy (wants) and 20% of earnings is set aside for savings or debts. Having separate business and personal accounts will help you track incomings and outgoings, and there are plenty of budgeting apps available to keep tabs on your expenses.
Get an accountant
By hiring an accountant you can leave your finances in the hands of an expert. A professional who will free up your time by helping you to understand your responsibilities while they balance the books. The best accountants will go even further and help you think long term.
Look out for someone who’s passionate about small business, who can help you strategise and improve processes to make you more money.
Save for the short and long term
We all face a broken boiler moment at some point, the kind of unexpected expense you can’t avoid that doesn’t come cheap. By splitting your savings into short and long-term pots you’ll be better prepared to cover those surprise costs without impacting your everyday budget.
You should also consider life after work and budget for a pension too. According to the government-backed pensions provider Nest, only 24% of self-employed people are actively saving into a pension. Make sure you do your research early to build a healthy retirement fund more effectively.
Branch out
Many freelancers rely on a small network of clients to keep the cash rolling in, which can be a risky tactic if you ever have to weather a difficult period. Think about the many ways you can monetise your skills.
Could you create a webinar series to walk through some common tasks, or produce a downloadable template for other professionals to use? One of the most rewarding ways to diversify your revenue streams is to coach another professional about what you know.
Make your money work for you
Setting money aside is one thing but have you thought about where you’re leaving your cash? If your savings are in a low-interest account, you could be losing money in the long run.
An ISA will earn more interest than a traditional current account and could help your money work for you. If you don’t need to regularly access your cash, shop around for accounts that limit withdrawals as they tend to offer more competitive interest rates.
Posted by Alex Abdelaziz
Image credits BartekSzewczyk via iStock & Cunaplus_M.Faba via iStock