5 Financial Planning Tips for Freelancers

As a new freelancer, planning your finances can be daunting. But with proper execution, it doesn’t have to be that stressful! Today’s post will walk you through five helpful financial planning tips:

1. Monitor your income and expenses.
2. Create a separate bank account for your business.
3. Account for your taxes.
4. Set aside an emergency fund.
5. Plan to take breaks.

Monitor Your Income and Expenses

Having a visual record of your income and expenses is key to knowing where you stand financially. It will help you set a budget for all of your expenses, whether fixed or variable. 

Thanks to the internet, this aspect of financial planning has become a whole lot simpler, with various tools available for tracking your income and expenses – from online software to spreadsheet templates. It’s easy to lose track of your money, so having your finances laid out clearly will allow you to stay informed and focus your time on other aspects of your work.

Create a Separate Bank Account for Your Business

Don’t put all of your eggs in one basket. Having one bank account for business and personal costs can make financial planning much trickier. Many freelancers use online providers such as PayPal and Wise to open a secondary bank account (at little to no cost). 

With two separate bank accounts, it’ll be clear which money is for which expenses, what money goes in and what goes out, and how much money should be deducted for taxes (which we’ll go into in the next section). 

Account for Your Taxes

Taxes can be harder to navigate as a freelancer, as you may be expected to know exactly how much you owe and when it needs to be paid. As a rule of thumb, try to save around 20% of your net income every month so that you can settle your taxes on time. 

If dealing with taxes and deadlines makes you uneasy, you may want to hire an accountant. You’ll be doing yourself a huge favor if this means having peace of mind and knowing you’re making on-time payments.

Set Aside an Emergency Fund

As confident as you might feel with your business and financial plan, don’t leave your piggy bank empty. It’s not unusual for freelancers to have a dry spell, and you never know when life might throw you a curveball. Stash a small amount of your income away every month until you have enough to cover you for at least a few months. 

Give Yourself a Break

This one’s a no brainer! We all need a break sometimes, but it’s a good practice to plan your breaks ahead (and not wait until you’re burned out!). Remember, you’re at the center of your business; if the center falls apart, then the rest may follow. 

Being your own boss, you might be surprised at how easy it is to forget yourself amid your busy schedule. So, give yourself some time off to relax and do something you really enjoy – whatever that may be!

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Not a freelancer yet? Consider taking our Becoming A Proofreader course! It’s a great way to learn the art of proofreading and gain experience. If you pass both the Becoming A Proofreader and Becoming An Editor courses with grades of 80% or higher, you’re guaranteed work with our partner company, Proofed. Claim your free trial today, and see how our courses can help you kickstart a new freelance career.