Choosing to take the plunge and become a freelancer can be a great move for you in your career. You will get to call the shots on which projects you take on, the hours that you work, and many other amazing flexible options. However, you do also need to make sure that you are going to be making food choices that will help you to save money. You are the only one responsible for making an income as a freelancer, so it is important that you put protections in place so that you are able to reach your goals.
Set a Budget
First of all, you need to make sure that you have a budget in place – both for your business and for your wider life. As a business owner, you now need to make sure that you are not over-spending on certain things. This can be easier to do than you might imagine, as little costs can quickly add up into big ones. As a result, you should create a budget for yourself so you can be certain that you are staying on track with your spending.
Make sure that you also have a budget in place for your personal life too. This is the ideal opportunity for you to fully sort out your financial health so you are confident that you are going to be able to manage your money in all aspects of your life. Learning to budget and set reasonable restrictions for yourself is a skill that we all need to master.
Learn How Your Taxes Work
As a freelancer, you are now responsible for paying your own taxes. You therefore need to make sure that you fully understand them so you do not end up over- or under-paying them as this can land you in trouble that is actually fairly easy to avoid.
For example, you do not have to pay tax in your first year if you make below a certain threshold. Knowing information like this can be vital in helping you navigate the world of freelance work. Know when your taxes are due, and make sure that you are preparing to pay them well in advance. By putting them off until the last moment, you are only going to run into issues that could have been avoided if you committed to working through them earlier. Getting into good habits regarding your taxes early on in your freelance career and you will be in a great position for the future.
Choose Your Equipment Carefully
As a freelancer, there is going to be some equipment that you cannot do without. Everyone needs at least a laptop, for example, so they are able to complete their work quickly and efficiently. However, electronics often come at a premium, so you need to approach your purchase of them in a smart way.
If you need to get a new laptop, consider a refurbished one over a brand-new model. These are second-hand items that have been cleared of the previous owner’s data and have been fully restored. Most of the time, they are older models or they might have a small cosmetic issue like a cracked case – with the machine itself still being perfectly functional. Buying one can give you the computing power you need at a much lower cost compared to if you were to buy an expensive machine.
The same principle can extend to your choice of phone. Many freelancers like to get a second phone as it separates their work life from their personal one. Pick up a cheap handset and take a look at some of the many SIM-only deals out there from companies like Lebara. If you think you can get by without a smartphone, this will be an even cheaper cost for you, but you can find many great basic models on the market that will be able to get the job done.
Aim for Low-Cost Meetings
As a freelancer, you might have to set up a lot of meetings with both potential new clients and ones that you are actively working with to chat through your projects. However, you need to make sure that you are not meeting up in places where you could spend a lot of money at once.
For time purposes, many like to schedule meetings over their lunchbreak. However, having to regularly pay for a lunch out means that you could easily be spending more than you think in a very short space of time. Even just meeting up for a coffee will add up, especially if you end up sitting with the client and ordering multiple drinks as the time gets away from you.
Try to get in the habit of arranging low-cost meetings – especially if they are just to chat about the progress of a project. It is understandable that you might want to impress a potential client over a lunch (especially if they can offer you a lucrative contract) but a progress report can really be delivered over Zoom or some other video conferencing software.
As a freelancer, you might be subject to the whims and changes of your chosen industry. You might not always have a guaranteed income that you can fall back on, and therefore you need to make sure that you have plans for the times when your income might be a little lower than you expected. There are so many uncertainties that you could face as a freelancer, and you need to be prepped for down periods as much as ones where you will find yourself working overtime.
This links neatly back to the need to budget well. As part of this, siphon off some of your profit each month and create a contingency fund for when you do not have as much work to do as you would like. This means that you are always going to have savings and funds to fall back on to get you through the rougher times. One can never predict the future, and a market crash or some other unforeseen occurrence could cause your work to dry up for a little while, you need to make sure that you are prepared for this to come to pass.
Choosing to work as a freelancer can be a great move for you, but it is important to remember that you might not always have that regular fixed income that is a guarantee in a traditional job. Therefore, you need to think carefully about how you are spending your money and what you are doing to save it too. There is no assurance that you are always going to be able to pick up contracts, even once you have built up your business and your reputation.
With some smart set-up in the early days, you will hopefully be able to protect your business and know where and when to spend money properly. Take the time to learn this, as you are the one who is wholly responsible for your income now. By pushing forward and setting up your savings and spending habits early, you are in a good position to keep your finances healthy for the rest of your career.