HOW FREELANCERS BUDGET MONEY
Financial turmoil is probably the worst challenge any freelancer could face. Unpaid invoices, delayed payments and under payments are unfortunately common in the freelance sector and the settlement process could cause more problems with business partners and clients. Then your own unpaid bills and not being able to pay your creditors could further result in lawsuits, collection calls and a negative impact on your credit rating. Getting paid is stressful, not getting paid is worse. You work hard for your money and deserve to be paid ahead of time, or at the very least, on time. Noone wants to be in debt, especially if it is not any fault of your own.
People can easily get into debt, simply by spending more than they can afford. When working in the Gig Economy you are expecting incoming payments every week, or every month, and sometimes you need to spend some money before you get it. Any time you take out a loan or charge something on your credit card, you’re borrowing from the money you hope to earn in the future.
So how will you mitigate the risk of being in debt?
- CUT
Cut expenses. Try to identify a few things you could stop buying or buy less often.
- PRIORITISE
Prioritise debts. Pay off the highest interest rate debts first and move funds to the next when paid off.
- SET GOALS
Set your goal. Each month, identify the specific target amount to pay debt.
- PAY MORE
The more money you put toward your debt, the faster you can pay off your debt for good.
As a freelancer, you don’t have an accounts department to manage your money. It is your duty to manage your own finances such as, finding work, invoicing clients, chasing payments and setting aside enough to cover your taxes and expenses. Avoiding debt is not all about expenses and cost control. It’s also about generating revenue. For freelancers, that starts with setting a realistic rate that covers your costs and reflects the value of your services.
