Sure, you've been productive at work even when you were feeling under the weather, or you'd rather be doing something else. But are you being effective with your finances? According to a study from Yahoo! News, at least 63% of freelancers are still financially unstable–and that needs to stop now! Here are some tips to get you financially productive as a freelancer.
Tip 1: Set aside money to be more financially productive
A great way to become more financially productive is by setting aside money each month. Regardless if you have a short-term or long-term project as a freelancer, it's essential that you take a portion of your earnings and put it away in case of an emergency.
The easiest way to do this is through an automatic transfer from your checking account into a savings account every month on the same day, such as the 15th or 30th. This way, no matter what happens with your finances over the course of a month, at least some of it will go towards building up enough savings for emergencies/major purchases/etc.
You can also use budgeting apps that will help you track all transactions into spreadsheets (which tends to be tedious). These apps will help show where all the money goes so that you know exactly where any extra should go towards building up your savings; they also help with tracking expenses so that there won't be any surprises when tax season comes.
Tip 2: Track your income and expenses
As a freelancer, it's easy to lose sight of your money–especially if you're working from home (and binge-shopping all those amazing online deals). But as a productive adult, it's time to track your income and expenses, whether you like it or not.
Tracking your finances forces you to think about your spending habits and get in touch with reality. Do you really need to buy that Starbucks coffee for the nth time? Or you could simply create a homemade coffee at home. Controlling the urge to spend money gives you more room to save for the rainy day.
Your first step should be figuring out how much money comes in each month as a freelancer. Once you've established the earnings you have coming in each month, you need to figure out what types of expenses you have. Expenses such as rent or mortgage payments as well as wifi costs, electricity/water bills, food or coffee costs (because coffee is life), gadgets, or other equipments that you may need as a freelancer.
Tip 3: Find ways to save money as a freelancer
When you work as a freelancer, it's easy to get caught up in the hustle and forget about saving money, but there are some simple ways to stay on top of your finances:
- When starting as a freelancer, be practical and realistic and keep your day job. By keeping your day job, you create two sources of income while you're still developing your freelance base.
- Shop around for insurance. You're going to be moving around often as a freelancer; make sure that your insurance policy is portable. If something happens while traveling or working in another country, it won't cost extra money out-of-pocket (or worse!).
- Consider a rewards credit card. Rewards cards give special perks like travel discounts and cashback on purchases. They're great tools for business owners who need to keep track of their spending habits, so they don't go over budget—and they can help save big bucks too!
Tip 4: Pay yourself first when saving for retirement
Paying yourself first is a concept that's been around for a while, but it's been gaining more traction in recent years. The idea is that you should have your retirement savings taken out of your earnings before anything else—even before taxes are deducted.
Tip 5: Practice being a smart spender
Being a freelancer definitely has its perks, regardless if you are working on short-term or long-term projects. When you finally start earning as a freelancer, try to practice the art of being a smart spender. It might be difficult at first (we know how tempting it is to order that new gadget from Amazon), but by strategically restricting yourself to spend, you prepare yourself for the future. When you start becoming smart with your money, you eventually become financially productive. Now give yourself a tap on the back.
Live the life you've always wanted by being smart with your money. As a financially productive freelancer, you are able to travel the world, work from anywhere you want, and not live penny after penny. So, how do you stay productive with your finances? Share them with us below!
You must be a registered user to add a comment. If you've already registered, sign in. Otherwise, register and sign in.