Freelancers, and the self-employed in general, are a fast-growing demographic within the work population. The internet has made it easier to find work for yourself than ever before and the gig economy is growing rapidly, for better or worse. As a freelancer, you are much more responsible for your own finances, which means that you should learn some of the essentials of money management, including the following.
You need to manage your accounts
One of the most crucial things you have to learn about being a freelancer is that you are responsible for managing your own finances. This doesn’t mean you can just let your accounts slip, however. You have to be able to prove your income and, in some cases, your expenses, especially when tax season arrives. As such, you should make it your responsibility to routinely ensure that your financial accounts are being kept up to date and double-check them for accuracy.
You’re responsible for paying your own taxes
Part of your financial recordkeeping is your responsibility to pay all of your own taxes. You have set tax dates in the year to pay them off by, and some people will wait until close to that date to even work out how much they have to pay, then pay it all off in one lump sum. This can be problematic, especially if you aren’t able to save enough in time. Instead, you should consider working out how much you owe and pay into it each and every time you get paid so that you have little to nothing to pay off at the end of the tax year.
You have to plan for your own financial future
You can be so busy managing your immediate finances that sometimes it’s easy to forget about the far future. You’re not going to have a pension paid into by an employer so you need to start thinking about your retirement now. To that end, you should consider working with financial advisers who can help you put some future planning in place. They can recommend the right products to put your money into to get the best savings, as well as how you can more effectively budget to make sure that you’re contributing a decent amount on a routine basis.
You need to ensure you get paid
Depending on your work setup, you might not have to worry too much about the payments that you receive. After all, many freelancers have contracts with agencies and large companies. If not, you should create your own contract that you have your clients sign, including the payment for services exchanged and when that payment is expected. Invoice management software can help you track your due payments as well to make sure that clients can’t wriggle off the hook when you’re owed money.
Becoming a freelancer offers a great degree of freedom, but it also requires much more responsibility from you as well. If you’re not prepared to take the steps above to ensure better money management, then perhaps self-employment might not be for you.