Freelancers need to understand how they can manage their daily, weekly, or monthly income. When you don’t employ good financial habits, you will find yourself in the same situation you were before you started earning as a freelancer. Reputable freelancers who have made quite a good amount, pay their bills, and others run substantial online businesses. If you are aiming at achieving what they have or even surpassing it, then you need to consider these 10 personal finance tips, which will skyrocket your income.
Managing money, together with personal finance, are vast subjects that you have to understand. Most freelancers tend to be anxious about their financial lives – how they are now and how they will look tomorrow. Maybe you want to buy equipment to help you with your freelancing career, or you wish to enroll for a $123 freelance training course or perhaps want monthly cash to pay your rent. Whatever the circumstance deciding on following my tips on finance matters is the best choice.
First things first, how do you manage your money?
The way you handle your money matters a lot. There are three vital money management sections you can control. Each lever is essential, and if you can manage all, then you are better placed.
Money Management Levers
- Making Money
- Saving Money
- Investing Money
Personal Finance Tips on How to Manage Your Money Well
Staying on top of your finances as a freelancer is very easy. Check these money management tips that most reputable freelancers use to accomplish their financial needs.
1. Start Budgeting and Reduce Expenses
As expected, since you are already making some bucks, the first thing you need to do is start budgeting.
Some myths say that if you want to lose weight, you need to start working on a diet. Budgeting should be your number one myth in your freelancing career.
Whether you are a writer, transcriber, a VA, or a developer, budgeting reinforces a mindset of cutting back expenses that bring you happiness.
When you start budgeting, you will be able to track each coin that comes in and which goes out. If you spend $50 on a bottle of Champagne Elite Champagne de Castelnau Brut Réserve every weekend, then you need to reconsider your options.
I am that person who likes competition in that you set the pace then I hike it up. When you move out to a two-bedroom house, I will work hard to get to a three-bedroom house in two or three months. Damn it, life was tough. “Expenses” used to rise and ruin my plans. I believe that your rent, be it home or stall rent, is your biggest expense. You should look forward to reducing it – going for cheaper options and not hiking it up by trying to live like others.
Budgeting for your money will make you have some cash for your savings account. This money can be used to cater for more critical eventualities.
2. Reduce Impulse Purchases
Huh, you were once a student, or maybe you still are. How about a mathematics teacher giving you a quantitative analysis test without prompting you. You feel like you can lip out of your skin and vanish into thin air. Why is this so? Because a test was brought without being informed, and now you are furious because you are not prepared for it.
Deligent freelancers, I hope the same feeling takes control when you bump into an item you had not desired to purchase.
Take at least 24 hours for small purchases and seven days or more for big purchases to assess if you really need the item, or you were just enticed with it.
“There are no small or big purchases, every extra coin you spent out of your plan will have an impact on your budget ”
3. Get Out of Debt
Debts are incredibly stressful. They can cause you sleepless nights and unproductive days.
People get out of debt every day, and so you can do it too because debt management is just a numbers game. You might need to start paying debts with high-interest rates. Check out these debt management strategies to help you pay off your debts.
There are many things you can invest your money in. Literally, you can invest in anything that makes you happy though happiness is not the ideal measure of success. You might be delighted to invest in an electronics shop, yet the products you are selling do not solve your consumers’ problems in that location. This means that you’ll fail.
You need to research and understand what your target customers need before you decide on what to invest in.
Investing is not gambling; even gamblers in a casino have a strategy for them to win. The same applies to investing your money. You need to have an investment strategy for things to work out. If you are beginning, it will be wise if you followed this strategy.
5. Build a Passive Income
Building a passive income is one of the best personal finance tips you can implement to earn an extra coin.
You cannot make an extra coin doing nothing. But once you set up a passive business, you will find yourself making more without much hustle. It will take you some time, but if you find the right passive income business, your time and money invested in it will be worth it.
You can start blogging as a passive income business. Create fantastic blog posts, and once they start ranking on google, that will be your breakthrough. These blogs will make you money for a long time.
6. Negotiate for Better Rates
Yes, you read it right.
Most freelancers are just afraid of asking their clients for an increase in pay. Some don’t know how to ask for a rate increase. If you are delivering high-quality results and the client is asking for more, why not ask for more as well.
You need to negotiate for better rates for you to up your income.
7. Savings Account
Freelancing is just like any other business out there. Some freelancers make $300 in a week; others make it way over $500. However, even after making such numbers, they end up spending all that income.
Failing to save will haunt you when your freelancing tools fail. You will have o money to repair and bring them back to operation.
Open a savings account and make a culture of saving 30% of your earnings. This way, you will be in a better position to face financial challenges that you might encounter. Save now and enjoy it later.
8. Plan for Emergencies
For sure, emergencies can eat up a significant portion of your savings.
From my personal freelancing experience, the most critical crises that can bring a halt to your work is your PC. In case it fails, you will have to repair it for you to continue with your work. This is why you need to set aside some money to handle such eventualities.
It is always good to use some of the best online storage drives out there to back up and store your work. Don’t save projects on your desktop, and this might save you some bucks when your PC starts malfunctioning.
9. Know Your Financial Priorities and Generate a Financial Vision Board
Staying on top of your finances means that you are adhering to your financial plans. The great minds on the business wheel have financial priorities set.
You need to identify the most important things to spend on. Try to minimize and eliminate less essential things from your budget for you to save more.
To adopt the best financial practices, you need to generate a financial vision board. This will keep you motivated to go through the entire freelancing and money management journey.
10. Track Your Money
Well, now that you’ve implemented the above personal finance tips, everything is laid out. The remaining thing is to track your money.
Tracking your money is something you must not take for granted. Keeping an eye on your net worth will enable you to know how much you are worth.
You can know your net worth by subtracting your liabilities from assets.
As a responsible freelancer, you need to keep track of how much money you’re spending and saving, how much you are investing, know the performance of your investment, and finally get an analysis of your net worth.
Bonus Finance Tip
Take a Daily Money Minute
This one minute helps her keep track of goal progress—and set her spending tone for the rest of the day!
The 10 personal finance tips together with time management strategies have been used by decorated freelancers to make good use of their earnings and to be productive. You, therefore, should implement most of them if not all.
What other personal finance tips do you use to manage your earnings? Drop them in the comment box. You might save a soul.