In collaboration with FSB
Working for yourself is often incredibly rewarding and for many people gives them the freedom to pick and choose to work on projects that interest them or they are passionate about.
But how do you manage your finances if you work as a freelancer? What can you do to help you ensure that you can continue to work for yourself without running into financial difficulty?
Assess your earnings
Successful budgeting begins with looking at your earnings and outgoings. As a freelancer this is a case of looking at how much you make each month against the costs of running your business, your bills and other expenses.
This should show you how much money you need to make to cover your costs, and more importantly how much money you have to save and use outside of your business.
You might find that you are struggling to cover costs for your business, organisations like the Federation of Small Business can provide access to a range of services which can help a business to thrive and save money.
Look at what you charge
Your assessment of your financial situation might uncover valuable information about your business and the work you do. You might discover that you aren’t charging enough for your services, which in turn is increasing your potential for financial difficulty.
If you find that your finances are struggling it can be worthwhile to research other freelancers in the same field as you. It might be that you are quoting too cheaply for work and underselling yourself.
Have confidence in the value of your work and ensure you charge a fair price for the time and effort you put in.
Have a minimum amount of work
One way to avoid financial difficulty as a freelancer is to have a minimum amount of work you need to take on to cover your costs.
Set this as an initial goal each month to make sure you at least meet your financial obligations.
As a freelancer, you might find that the amount you make can vary from month to month, sometimes you will be much busier than normal and sometimes you might be much quieter. This can mean that there is a level of uncertainty to what you earn, which is why it is crucial to have a plan in place to help you manage your money effectively.
If you find that the amount you bring in from freelancing caries frequently it might make it difficult to generate a steady income. In these situations it might even be worth looking at other options for work as a way to help support yourself financially while you work through quieter periods as a freelancer.
Looking at the amount you earn and the amount you spend should show you the areas where you could stand to save money. This could happen in a number of areas including:
- Utility bills
- Phone contracts
- Internet costs
You might be able to make simple changes such as where you shop to help save money each week. Or you might need to make larger changes that involve more research like finding cheaper internet or energy suppliers who offer more competitive prices.
Finding ways to save even a small amount of money can go a long way to helping ease stress and tension if you have a quieter period as a freelancer.
Managing your finances and the amount of work you take on as a freelancer can be a delicate balancing act. Getting it right can mean you are charging the right amount for your work and monitoring your outgoings closely to ensure you save money to help you deal with whatever slumps in work there might be.
This was a guest post in collaboration with FSB. Photo credit: John Mark Arnold