6 Ways to Better Manage Your Finances as a Freelancer

As technology develops, there are many jobs available now that are not tied down to an office but are still able to generate income. Being a freelancer is a great career prospect that is currently loved by many young people.


Time flexibility is indeed an advantage for freelancers because they can freely determine what time they have to start working. Unlike office workers who are bound by working hours from morning to evening.


But behind these advantages of course some problems are often encountered. For example, not having a definite income, insurance, and holiday allowances that employees usually get as part of the benefit. As a freelancer, you must be willing to face the risk that the income you get will be uncertain every month. Without working on the project, there will be no income.  The project also depends on the client so the amount of income each month is uncertain.


To address this issue, you need to have proper financial planning. This needs to be done so that at any time when you have completed a project and are looking for a new client your financial needs can still be met. In the following, we have explained what types of mistakes in managing finances are still often made by a freelancer.


Not creating a monthly budget


The first mistake a freelancer makes when managing finances is by not making a monthly budget. Every person, whether freelancer or full-time, must make a monthly budget so they can know where their money is going. So, every month try to write down how much your income is. Then divide it into several parts for expenses. For example expenses for daily meals, grocery shopping, transportation, and so forth. Making a monthly budget will help you save more because you can monitor incoming and outgoing money.


Because you don’t have a fixed income, a freelancer is also required to make a monthly budget so that you know how much money you have to spend on living expenses. In this case, you can separate which list of basic needs and which are not. Remember, everyone’s spending is different. So don’t equate other people’s needs to be used as a benchmark for your expenses because later it will become subjective and inconvenient for yourself.


Not recording any of your financial expenses


Making financial records is very important for anyone to do, especially for freelancers who don’t have a fixed income like permanent employees. If you are confused about managing finances, don’t worry, many applications make it easier for someone to record daily expenses that can be downloaded.


Not setting up an emergency fund


Setting up an emergency fund is also an obligation for a freelancer because at any time it can be used as funds in an emergency setting. Until now there are still many people who still don’t understand the importance of an emergency fund so they never set it up.  However, an emergency fund is very important.  For example, when we experience an urgent situation such as having to go to the hospital, we can use these funds to cover medical bills.


The recommended amount of savings or emergency funds for working freelancers is 4 to 6 times the average amount of income per month.  


Do not have an insurance


Though Insurance is very important, unfortunately, not everyone understands the importance of having insurance. There are various types of insurance that you need to have, such as health insurance, life insurance, and many others. When you have insurance, you don’t have to be worried in case you get yourself into an emergency, because the costs will be covered by insurance. Can you imagine having to worry about money while you are ill? Definitely will be a burden for you. So, from now on, try to set aside some of your income for insurance. 


Lack of awareness of the importance of savings


There are lots of freelancers who only focus on meeting their current needs. It’s not wrong, but don’t forget the importance of having retirement savings. Not setting up a retirement fund or retirement savings is one of the financial mistakes that freelancers often make. Surely you don’t want to live in old age by having unstable finances? Therefore, it’s better to start setting aside your money little by little for old-age savings.


Not managing taxes properly


One of the important things that freelancers need to remember in managing their finances is managing taxes. As a good citizen, of course, you need to pay taxes according to the rules. If not, you may be subject to sanctions from the state.

Aside from these tips below, ensuring you are a savvy shopper is as important. You can easily be a savvy shopper by purchasing for your needs through Temu. Visit Temu on Twitter to know about its recent news and promos!