by skysnap » 10 Nov 2016, 11:21
Freelancers go through lot of financial ups and downs. And it's not easy to balance the daily life if the finances are not in order. It helps to have some habits to save some money over a period of time. Here are some of the tips for handling finances in your freelancing career.
Image Credit :Stocksnap (Free license)
Emergency CashIt is always a good idea to set aside some money that can help for atleast 1 year of monthly expenses. This is to balance out those dull days and lack of work. Though it helps to hunt for the job during the dull days. But the sickness and other health emergency requires you to be proactive over this matter. You may want to save some percentage of money for this emergency cash in bank account.
Savings AccountYou have to save atleast 30% of each gig into savings account. This habit will help you save a lot of money over a period of time. The saved money then can be invested into assets that give compounded returns. Make sure you invest into government bonds, deposits and other funds. Savings account can also be used for building your asset. Make sure that you invest some amount of money every month. If your earning is irregular then saving 1 year of emergency funds into the savings account makes sense.
Retirement AccountMost of the countries have the government supported retirement accounts. These accounts can hold your money after your retirement. And the money invested into this may not earn good interest. However the money added into this is for the purpose to protect from the inflation. These type of accounts are a good option to park your money. These accounts also save taxes when you invest into them every year.
Health InsuranceInsurance is another way to save money. If you invest into the insurance then this can be of use during your old age. Health insurance requires you to invest in plans before reaching age of 60. After the age of 60, you start to make use of the insurance benefits. This can be another asset to save for retirement. Saving into insurance, will help you have money during your old age. Laws for health insurance varies around the world. So you may have to look for local options.
Spend on EssentialsFreelancers have a lot of dull days. And this means they have to only buy things they need and avoid buying things that don't matter over long term. Keeping the habit of buying only the essentials help a lot. You need to focus buying things you need. This helps keep your finances in order. And you don't end up with empty bank account. For me this has always worked as I only spend on essentials.
Alternative Income SourceOften freelance gigs alone don't pay the bills. And you have to get a job in order to earn some decent money. In such case you can get a job or find alternative income source. Find something you can offer on rent. You can also sell stuff on ebay and create alternative income for yourself. All of this requires some time. So you have to start now and build your income streams. The earlier you start easier it gets.
There are many ways the finances can be managed for freelancers. However a lot of what we do is more of trial and error. What works for me may not work for you. And for this reason you have to take both aggressive approach for increasing the income. That can solve a lot of issues over a long period of your freelancing career.
Freelancers go through lot of financial ups and downs. And it's not easy to balance the daily life if the finances are not in order. It helps to have some habits to save some money over a period of time. Here are some of the tips for handling finances in your freelancing career.
[img]http://i.imgur.com/oUsEMCZ.jpg[/img]
Image Credit :Stocksnap (Free license)
[b]Emergency Cash[/b]
It is always a good idea to set aside some money that can help for atleast 1 year of monthly expenses. This is to balance out those dull days and lack of work. Though it helps to hunt for the job during the dull days. But the sickness and other health emergency requires you to be proactive over this matter. You may want to save some percentage of money for this emergency cash in bank account.
[b]Savings Account[/b]
You have to save atleast 30% of each gig into savings account. This habit will help you save a lot of money over a period of time. The saved money then can be invested into assets that give compounded returns. Make sure you invest into government bonds, deposits and other funds. Savings account can also be used for building your asset. Make sure that you invest some amount of money every month. If your earning is irregular then saving 1 year of emergency funds into the savings account makes sense.
[b]Retirement Account[/b]
Most of the countries have the government supported retirement accounts. These accounts can hold your money after your retirement. And the money invested into this may not earn good interest. However the money added into this is for the purpose to protect from the inflation. These type of accounts are a good option to park your money. These accounts also save taxes when you invest into them every year.
[b]Health Insurance[/b]
Insurance is another way to save money. If you invest into the insurance then this can be of use during your old age. Health insurance requires you to invest in plans before reaching age of 60. After the age of 60, you start to make use of the insurance benefits. This can be another asset to save for retirement. Saving into insurance, will help you have money during your old age. Laws for health insurance varies around the world. So you may have to look for local options.
[b]Spend on Essentials[/b]
Freelancers have a lot of dull days. And this means they have to only buy things they need and avoid buying things that don't matter over long term. Keeping the habit of buying only the essentials help a lot. You need to focus buying things you need. This helps keep your finances in order. And you don't end up with empty bank account. For me this has always worked as I only spend on essentials.
[b]Alternative Income Source[/b]
Often freelance gigs alone don't pay the bills. And you have to get a job in order to earn some decent money. In such case you can get a job or find alternative income source. Find something you can offer on rent. You can also sell stuff on ebay and create alternative income for yourself. All of this requires some time. So you have to start now and build your income streams. The earlier you start easier it gets.
There are many ways the finances can be managed for freelancers. However a lot of what we do is more of trial and error. What works for me may not work for you. And for this reason you have to take both aggressive approach for increasing the income. That can solve a lot of issues over a long period of your freelancing career.
