Something no one ever wants to be, freelancer- or not. If it doesn’t refer to a broken plate or cup, and hopefully not a broken heart, no one wants to be broke. More so, in freelancing, when you don’t really have someone giving you a paycheck every month, and you seem to be the one at the helm of affairs, deciding if you’d get paid any reasonable amount, or not.
This article is to help freelancers to avoid the menace of being broke. It might not help you to swim in dollars, but how about we stay above board first?
You deserve a paycheck
Despite all of your obligations, one sure way to avoid being broke is by cutting yourself a paycheck. Now, having a consistent income as a freelancer might not be a very easy task- some months you have more money than some other months; but the point is that you need to have enough money to cover up your living expenses and all other monthly expenses. To do so, it is best to cut yourself a paycheck every month. And how do you do so?
Well, if you have been into freelancing for over a year, a realistic way to do so would be by calculating your total income (minus tax) for the past 12 months and dividing it by twelve. This takes into account both the good and bad months to arrive at an average income. Haven’t been into freelancing for that long? No worries; even if you’ve just been into it for 3 months, you can use this same method to arrive at an estimated income.
How much is your ‘predictable’ income?
Now that you have cut yourself a paycheck as if you were your own employee, we can then move forwards with our money management tips. A paycheck kind of gives you an amount to work with per month, as your relatively ‘predictable’ income.
You can adopt a method, such as taking this relatively predictable income and subtracting your running expenses from it- things like your rent and other bills that make up your recurring expenses. Done that? Good.
Next step is to take the remaining amount and then it is divided into four, to give you a weekly income. This is the amount of money within which you function per week. At first, it might not be so much, but then it gives you a realistic picture of how much you actually have per week/month to utilize for your everyday needs, and in effect, to avoid being broke.
Yeah! The word which no person wants to hear, not even the doctor, is the word ‘Emergency’. This word sort of connotes a state of unpreparedness, and means in effect, that you might have to put in a lot more effort into ensuring that this situation is corrected. An emergency is one thing that can make you broke really fast.
Want to avoid being swept up by emergencies? Have an emergency fund. Financial experts would suggest that before you launch out on your own into deep waters, you should have at least 6 months- worth of funds in an account for cases of personal or business emergencies. Fine, you might not have gotten this ready as at the time you launched into freelancing, but now that you’re a freelancer, you absolutely need to start setting aside some money (from your calculated weekly or monthly income) for cases of emergencies. This way, you aren’t thrown off balance by situations which you could have prepared for.
Have a budget
The thing about being artistic is that you tend to go with the flow. But my dear friend, there is nothing artistic about money! You have to learn to budget every kobo you spend; every single dollar must be accounted for. This way, you know exactly how much you’re spending- and where you’re spending it. been working so hard, and then you decided to catch a bit of fresh air by hanging out with friends at a movie? Good. Note it down (and be sure to take it out of your income for that week, dear). You might have to get a notebook to write down your weekly budget and expenses, or use apps which help you do this.
Follow your budget
Unless in special situations (nope, not everything which you feel like doing falls under this category), following your budget is a sure way to stay above water when it comes to being broke. One of the easiest ways to have zero money is to spend your money on all of your whims and caprices. Thus, following your budget is one area where you have to be stern with yourself.
You know what happens to you when you consistently follow your budget after a weeks or months? You begin to feel really confident in your own money management skills (and you do deserve a hug- come ask for one once you get this done!).