How To Manage Finances As A Freelancer

Posted by Ian on January-11-2012 under Save Money

The majority of us know that it is important to manage expenses and understand exactly where your money goes. This is given, and most families, like corporations, keep a close eye on their budgets. And if you are a freelance worker or self-employed, managing finances is highly important. Freelancers, in particular, should strictly maintain some sort of expense record. There are various freelance jobs available around the world, anything from freelance accountants to freelance pet grooming, and with the advent of the internet, it would appear that writing has grown into a popular freelance occupation. Clearly for a writing freelancer, keeping a record of earnings must be a difficult task as income comes from different clients. With this point in mind, let’s discuss some different methods of managing finances as a freelancer.

If you are computer savvy, and it is more than likely that you are, download or purchase from a computer store, some bookkeeping software that will enable you to keep tabs on income. There are various easy-to-use financial record keeping programs available these days; programs that automatic calculate the data as you enter it. For the few, in today’s tech world, not exactly nimble-fingered with a computer, you may want to consider purchasing a real 20th century ledger. One of these books, though cumbersome and somewhat anachronistic, will allow you to check your income instantly – you’ll not have to wait for a computer to warm up before checking. The downside to using one of these large notebooks is that you have to input data and make all calculations yourself. Perhaps doing your own math isn’t such a bad idea – brain exercise.

Also, read our post on How to keep track of your expenses.

Freelancers should also diligently manage their time – the adage “Time is money” is the freelancer’s motto. Time is an important factor in balancing your finances. If you spend too much time on one job, you’re going to lose money instead of make it. It is, therefore, important to make sure you are able to complete the work within the agreed time. Getharvest.com is a nice time tracking website that allows you to distribute your freelancing hours evenly. Naturally, how you plan your working time depends on the job at hand. Most freelancers, in all fields, base their working hours on payment. That is to say, if a client promises you $1000 for a particular job, you’re going to schedule more time for that job rather to a job that is paying you only $100.00. It is, therefore, important to enter the time spent on any job in your ledger or bookkeeping software.

In regard to invoicing, make sure you keep records of the invoices sent out to clients for completed work. Don’t get sloppy and forget to send an invoice. When the tax man comes to your door and asks to see a record of your income, he or she is effectively asking, “I’d like to see all your invoices.” Making use of Freshbooks.com you are able to send and receive invoices quickly and easily. The site aids you in keeping your finances professional and up-to-date. You are also able to be access the website through most smart-phone models retailing these days.

One final piece of advice for freelancers who wish to manage their own finances, make use of online banking, and if possible open a separate account to use for your freelance expenses. Doing this avoids mix-ups with your personal finances. It is also a good idea to open a PayPal account. PayPal allows you to, not only shop on the Internet, but also send and receive monies hassle free. There are, no doubt, many other ways and methods of keeping a record of freelance finances; the above are just a few of the important.





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