As an entrepreneur, solo-preneur, or you-preneur, you're in the business of doing your thing - freelance work. You may face some unique challenges when it comes to freelancer financials. Things like balancing the budget, fluctuating income, surprise biz expenses, DIY retirement savings and insurance.
Irregular paychecks doesn't have to mean an irregular financial plan. Balance your passion and your paycheck with these five money management tips for freelancers.
- Know your break even number. Your break-even number is the amount of money you need to earn to cover your essential expenses like bills, food, and other primary living expenses. Complete your budget and ‘star' all the expenses you have to have. This is the amount of income you want to shoot for every month to stay in the green.
- Keep business and personal expenses separate. Organize your freelance budget spending by keeping it separate from your personal budget spending. Not only will it help come tax time, but keeping business and personal expenses separate can give you a clearer picture of how much you spend on your business. Try putting all of your business expenses on a separate card or account to clear up any blurred lines between business and personal spending.
- Start building your emergency fund. This is typically 3-9 months of those expenses you ‘starred' when you completed your budget, saved in case of an emergency. It can be especially helpful to ease stress in those months we wish we could have made more money. Start saving a little each paycheck, and consider stashing that money away in its own dedicated savings account to avoid the temptation to spend it.
- Replicate your corporate benefits as appropriate. You'll want to consider benefits you may need that are normally provided by a company - things like health insurance for medical expenses, disability insurance in the case you can't work because of disability or injury, or a retirement account. Talk to an insurance agent in your area to make sure you have all your bases covered.
- Don't neglect your credit. Building and maintaining good credit can impact a lot of things in your financial life. From a mortgage for your home, to a loan for your small business. Check your credit score today and pull your credit report from annualcreditreport.com. Learn more about building your credit score here.
These tips come from the Next Door® Financial Coaches. Next Door is a financial education learning lab offering insights and education on financial well-being. Find more from Next Door here and follow on Instagram for more money tips @nextdoorchicago.