Freelance jobs and remote work have become the new norm. More and more people are choosing this way of working because of the ease it provides compared to working a typical office job. With freelance work comes different tasks than what a traditional job requires. Being your own boss means keeping yourself accountable and in a routine in order to keep your business afloat. Finding ways to budget your money, protect your business, separate your personal expenses, and plan out your work week are all important jobs that need to be done.
Budget Your Money
Depending on your specific freelance business, your income may be irregular or unsteady at times. It’s important to manage your money wisely in these situations, especially if you’re planning to save for a big investment. Dedicate time each week to determine what you will earn based on your upcoming projects and compare that figure to the expenses you have. If you can, use any leftover money to put into savings for emergencies or large purchases like buying a home. Building your savings account will help to put your mind at ease if any emergencies were to occur.
There are multiple ways to provide some financial relief as a business owner. For example, If you’re in the market for a new home, this is another instance where you really want to hone in on your finances. If you feel finanically secure enough to invest in a house, you can start by applying for an FHA loan, which will require you to give a 3.5% down payment. This type of loan requires the least amount of money down and may be easier to manage as a freelancer. Once you’re settled into your new house you can find a space where you can set up a home office and get to work!
Another way to achieve some financial relief is to apply for a business line of credit. This type of loan allows you to borrow money when needed and you will pay the purchase off over time. Interest will be charged only on what is borrowed.
Set Up Insurance
Traditional jobs offer insurance to their employees, so the worry of affording it is relatively low. As a freelance worker, you’re responsible for getting your own insurance, which can be much more expensive. You’ll want to look into health insurance for yourself, along with insurance for your actual business. It’s highly recommended that entrepreneurs purchase liability insurance to protect their business. This is especially important if you have employees that help you with your weekly tasks. Liability insurance lets you cover all your bases and lower the risk of any issues in the future.
Are you considering getting health insurance as a freelancer? It has been reported in the past 3 years that only about 24% of freelancers obtained some sort of health insurance. This may seem to be surprisingly low, but when you are paying this out of your own pocket, these expenses add up quickly. Determine what types of health insurance you’d like to get for yourself. Some people will choose not to get insurance, in an effort to save money, but this is a huge risk to your personal health and safety. If you have the money to obtain the proper health insurance, it’s highly recommended.
Separate Bank Accounts
Most freelance businesses need to have their own business bank account, especially if they’re named as an LLC, Corporation, or DBA. This separates your business from your personal assets which provides you with more protection. Whether you need to or not, it is recommended that you open a separate checking account for your business. Having a separate checking account will help you keep track of your business expenses without getting them jumbled with your personal spending. It also can help project cash flow, help avoid overspending, and legitimize your business.
Almost every bank has an option to sign up for a business account and the process is relatively easy. The top few banks that offer these services are Chase Bank, Bluevine, and Capital One. If the bank you currently use for a personal checking account offers business banking services, it will easily allow you to transfer money to your personal account and vice versa if need be.
Time Your Projects
Making sure you’re budgeting your time with projects can ensure that you get things done efficiently and effectively. One tip is to create the best routine you can while working as a freelancer at home. Using techniques like time blocking to focus on one specific project at a given moment can help you to complete tasks more efficiently. There are multiple apps you can use to manage and balance your time. Many freelancers find making a spreadsheet for their weekly tasks extremely helpful. You can color code different statuses to help you be aware of what projects need to be started, are in progress, or are completed.
Another way to effectively manage your projects is to know what times of the year are most busy for your specific line of work. If you’re a photographer, do you find that Fall weddings are the busiest season for you? If so, maybe this means you work less in the months prior and take time off if you’re able. Then you can be ready to go when crunch time comes. Track your projects just as much as you track your spending. Time is money!
Set Yourself Up For Success
As a freelancer, you’re fully responsible for your work and what comes from it. Finding ways to fine-tune your process will set you up for success and help you become successful and profitable. Yes, freelance work can come with challenges that the typical cubicle job wouldn’t, but if you love what you’re doing, the benefits will outweigh those challenges. Find a routine that works for you and try your best to stick to it. Also be sure to manage your money so you can save up for those out-of-the-blue emergencies or big purchases.
Protect your business by looking into the best liability insurance for your specific line of work. Choosing to become an LLC is a great first step in separating your personal assets from your business. Time your projects to be the most effective you can be. This may take time but you will learn as you go. Before you know it, these tasks will become second nature to you and you’ll manage your money like a pro.