5 Budgeting Tips for Freelance Proofreaders
Becoming a freelance proofreader can bring you freedom and flexibility, but this can also make it difficult to stick to a budget. Luckily, we’ve got some budgeting tips to help you stay on top of your finances and put money aside into savings:
- Make sure you keep track of exactly how much you’ve earned each month.
- Track your expenses and calculate your net income to work out how much money you can put into savings.
- Remember to account for taxes to avoid getting caught out at the end of the year.
- Be ready to adapt your lifestyle to meet your saving goals.
- Use accounting tools that make budgeting easier.
Read on to find out about these tips in more detail.
1. Check Your Income Regularly
It can be tempting to think of work completed as money earned in a given month, but unfortunately this isn’t always the case for freelancers. Depending on your invoice terms, and whether or not a client pays on time, you may not be paid for the work you’ve done in the same month you complete it.
This means it’s important to keep track of your actual income each month – that is, paid invoices – so you know exactly what you’re earning.
Set aside a specific day each month to go over the previous month’s paid invoices and make a note of what you’ve earned. By doing this, you can be confident that your budget is accurate and on track. Keeping a record of this will also save you time when you come to file your tax return, which we’ll come to later!
2. Budget for Business and Personal Expenses
Budgeting for all your expenses will help you stay on top of your finances. Consider setting up a spreadsheet of your monthly spending, divided into categories, so you have a clear picture of where your hard-earned cash is going.
Once you’ve got an idea of your expenses, you can work out your net income by following this formula:
Total income – expenses = net income
You can then put most of your net income into savings or keep it safe for emergencies. However, your net income is also taxable – which leads us neatly onto our next tip.
3. Remember to Set Money Aside for Tax
Yes, even freelancers need to pay taxes. And being self-employed means you’re responsible for knowing exactly how much and when you need to pay.
Paying your taxes late, or not paying them at all, can leave you liable to fines and other penalties. This means it’s vital to research your country’s tax rules for the self-employed.
The rate will differ depending on your circumstances (i.e., how much you earn and what your country’s tax rules are), but a good rule of thumb is to set aside around 30% of your net income each month. This way you won’t be caught out with a big bill or have to dip into your savings when your taxes are due.
4. Be Prepared to Adapt
Freelancing is all about flexibility, and this applies to your budget too.
If you’re saving up for something big, keep the formula from our second tip in mind. If you want to save more than you currently are, you’ll either have to earn more or spend less (and come up with a plan that will help you do so!).
You can use your projected income and expenses to estimate how much you’ll be able to put away in the coming months, but sometimes the reality is very different. This means you might have to make some lifestyle changes to meet your goal.
Freelance work can also be unpredictable. Consider doing quick weekly check-ins with your finances to see if you need to adjust your spending, especially when you’re getting less work than normal. These mini checks may seem time consuming, but they’ll help you avoid any nasty financial surprises.
In short: planning is important, but so is adaptability!
5. Use Money Tracking Tools
There’s nothing wrong with a good old-fashioned pen and paper – or a slightly less old-fashioned spreadsheet. But for those of us who aren’t spreadsheet savvy, there’s a wealth of money tracking tools on offer.
Even better, a lot of the tools available can also handle tax calculations and invoicing, which makes them ideal for freelancers. We compiled a list of our favorite accounting tools to give you an idea of where to start.
If you’d rather avoid the stress of managing your finances altogether, and your budget will allow it, you could hire an accountant. An accountant keeps track of your income, expenses, and tax, and advises you about ways you can increase your net income.
Becoming A Proofreader
We hope you’ve found our budgeting tips helpful. If you’d like to become a freelance proofreader without breaking the bank, our proofreading course is great value and comes with a work guarantee for successful graduates. Try it now for free!