Nowadays, many American workers were shifting to a freelance job. They prefer freedom and flexibility rather than stability. This is the reason why the number of self-employed individuals is rising.
Being self-employed involves several challenges particularly in managing the cash flow. It’s because freelance work does not guarantee to receive regular pay. That’s why the individual will be the one to shoulder the tax duties and health insurance.
Budgeting and saving at the same time take a toll. There are times that you may run out of cash. You may think to tighten your belt just to make both ends meet. This may be inevitable that’s why self-employed individuals must learn how to save money properly.
Plan a budget
Planning your budget is important regardless if you’re a freelancer or a business owner. Identify your source of income and list down all the monthly expenses. Most likely, your fixed financial obligations like mortgage, subscriptions, and monthly bills would take the biggest part of the budget. Paying your mortgage the soonest possible time can help to alleviate your budget. As much as possible, you should stick to your budget.
Identify your rate
As a freelancer, you must set your rate according to your experience and skills. It’s better to ask for installment payment for the project rather than billing in a lump sum or after finishing the project. It would be difficult to budget the money if the cash comes once.
Determine your taxes
Now that you’re working solo, you must be aware of your taxes. If you don’t have any idea about the tax bracket, you can ask help from a financial advisor so that you will be guided what to do.
Set an emergency fund
This is essential for self-employed individuals to save an amount for an emergency fund. Keep in mind that you don’t have an employer to pay for your health insurances. You can use the emergency fund if you’re in financial crisis. When you receive your monthly income, you should set an amount for an emergency fund.
Ask for help
If you have more tasks to do, you can consider getting help from other freelancers. This way you can focus on more important things.
Being self-employed has its own benefits. But you need to be smart in spending your income and at the same time saving some of it.