4 Money Management Tips for Freelancers

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4 Money Management Tips for Freelancers

Perhaps freelancers need money management tips most. Yes, you know the reason. Their income is always volatile and also unpredictable. If you are a freelancer, it is your story. When a month stats, a freelancer cannot have a precise idea about how much he/she is going to earn this month. According to the types and quantity of projects, the amount of earning takes shape.

Here are some money management tips that a freelancer should follow-

Hire an accountant

The biggest issue about freelancers is that their income and finances do not look organized. The earning does not come under the tag of the standard salary. It is the reason when they apply for any credit card, loan etc. rejection is the most common thing to happen. Finance companies find it difficult to assess their income as the source and stability of income is not easily detectable. An accountant can give a professional appearance to the finances. He accumulates the scattered details and acceptably compiles them. Also, he can suggest ways of tax saving.

Keep a back-up for tough times by taking an average of income

The good and bad days turn by turn. The latter ones are difficult to tackle financially for a freelancer. In the absence of a regular and certain income, any day the money related nightmares may turn true.

The best way is to take out the average of your yearly income, divide it by 12. The figure should be the baseline around which you can make your budget. Do not forget to keep saving/emergency fund a vital part of the budget.

  Example –

January

£1300

February

£1100

March

£1000

April

£700

May

£2500

June

£3000

July

£1400

August

£300

September

£900

October

£1000

November

£2000

December

£2700

Total

£17900 (yearly income)

£17900 /12 = £1491.6 (Average income)

Do smart tax management

You do not have one employer, and this is the reason that you come under the tag of self-employed. There is no financial benefit bestowed to salaried employees. You have to pay taxes, and that should be done smartly with practical ways to find out methods of tax deduction.

Create a separate account for tax and deposit the due money in that account. Besides this, keep working on the ways that make you eligible to demand for a tax deduction.

As a freelancer, you can demand deduction in tax on the following aspects-

  • Property rent
  • Travel expenses
  • Software purchase/tool purchase
  • Travel expenses etc.

Keep your big purchase in focus

If you have your big purchase in mind, you try harder to keep finances strong and stable. For example, – home buying is always tricky for the freelancers because their income is challenging to assess. If you have a target in your mind, you will naturally work on the relatable methods.

A significant deposit is necessary for home buying and to know what exactly should the amount in your case, take professional help. The mortgage brokers can tackle the issues of the freelancers quite efficiently. You can visit any of the popular ones. To suggest a name, visit Shine Mortgages online to find out what size of down payment you need. However, first of all, keep a precise choice of location of the property in your mind. There are other names too like Mojo, Trussle, John Charcol etc.

Ask your accountant to suggest the ways of money management according to the target of the big purchase.

Conclusion

The above ways of money management apply to all types of freelancers. The most straightforward rule is that keep your finances simple and understandable for the world. For your small and big financial goals, it will be necessary to put your money matters under scrutiny. If they look predictable and detectable, no target of future can be impossible. Keep an organized approach and try to grow every month and every year. Progress in income is the only way for a freelancer to bring his earning capacity into notice.

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