Like it or loathe it, freelancing is the way of the future for many young professionals. Though there are many advantages to freelancing for a living, it can be difficult for new freelancers to manage their finances effectively. After all, freelancers don’t receive a “steady paycheck” like traditional nine-to-five employees. Nor do they have access to insurance programs from employers. Given all that, today we’re going to highlight four financial tips for aspiring freelancers that will help them stay out of debt and on the path toward economic prosperity.
Figure “Average” Income
It can be tricky for freelancers to budget their money effectively –– in large part because they might not know how much they’re going to make in a given week, month, or year. Indeed, it’s not unreasonable for a freelancer to make $5,000 in a two-week span only to barely crack $1,000 over the next month, for instance. The key, then, is to calculate your average yearly and monthly income. This will allow you to set an accurate budget and reasonable financial goals and expectations.
What is the value of freelance work? In truth, it can be difficult to say. What you charge to complete a project may be more or less than what a competing freelancer charges. Because of this, freelancers need to be skilled negotiators in order to 1) land jobs and 2) make money consistently. As a general rule, you can’t be afraid to negotiate with clients. However, you shouldn’t make a habit of selling yourself short. Providing services for less than they’re worth can weaken your bargaining position in the future.
Create Savings Funds
As mentioned above, freelancers don’t have access to 401ks or insurance programs set up by employers. Instead, they need to create savings funds for themselves. Signing up for health insurance and setting aside money for retirement might not seem glamorous, but it’s essential all the same.
Freelancers have good months and bad months; successful professionals learn to take everything in stride. They don’t give into financial anxiety after a paltry month, and they don’t suddenly splurge after a lucrative period. Maintaining an even keel and a positive attitude is one of the best ways to set yourself up for long-term success as a freelancer.
Whether you design websites for startups or you write detailed articles about complex equipment like ACD-A tubes, freelancing can offer young professionals a meaningful opportunity to forge a career path. Thankfully, the above tips will help you reach your goals and avoid financial pitfalls. Keep them handy –– you’ll be glad you did!