Managing your freelancing income will be difficult if you don’t know-how to do it. Most freelancers tend to spend their income buying unnecessary stuff, so they’ll end up without savings. The freelancers earn enough and so they must learn to manage it well otherwise, they will end up with nothing to get when they need it the most.
Here are some tips on how you will manage your freelancing income and avoid being a “one day millionaire.”
1.) Separate your personal and business bank accounts
You need to separate your personal money to the money you get from your freelancing gig. If you’re only having one bank account for both, you’ll be confused and you can not track the flow (in and out) of your money. Another thing is for audit purposes. It will be a lot easier if your income is reflected well to your business account, not mixed with your personal account.
2.) Track your income
Keeping in track with your income will make your budgeting easier. When you know how much you earned it will be easier for you to manage your finances. You can use an app to track your finance or you can list down everything on a notebook. In that way, you will be aware of the flow (cash in and out) of your finances.
3.) Set Up An Emergency Fund
An emergency fund is another priority, the same with your savings. Your emergency fund should be at least 3-6 months worth of your monthly income so that when you experience uncertainties, you will have an available fund to use. Having an emergency fund helps you especially when there’s a financial crisis that will happen in the business, you don’t need to borrow or take a loan and pay high interest rates in order to recover.
4.) Get Insured
As a freelancer you are not entitled to free insurance coverage except for those who have generous clients. Insurance like Health Insurance Plans are expensive. However, because it is a necessity you don’t have a choice but to buy for yourself. When you fail to get insurance, you will be exposing your loved ones to financial risks. There are many insurance coverage in the market, just make sure you pick the right coverage for your insurance needs.
5.) Save For Retirement
Retirement plans are realistic initiatives for your future. As you grow older, your body will be weaker which means time will come that you will retire and you will not have income anymore. Retirement may seem optional to some, but it’s essential to everybody. The same with insurance coverage, retirement plans are your intangible assets where you pay now and enjoy the benefits in the future. There are lots of retirement plans available in the market, choices are pension plans, insurance coverage, Personal Equity Retirement Account (PERA), investments and many others.
Managing your income affects your future. What you saved today, will be essential tomorrow. The tips being mentioned above are different options you can choose but, you can have all of them if you can because these tips are all important in our lives. Start saving now, as it will benefit you in the long run. Start in a small portion and eventually in the future, it will grow and you will be enjoying the benefits of it.
Get guidance from the Filipino Virtual Assistance, if you need one today, we are here to help you succeed.