Financial essentials for freelancers
So you’ve been dabbing into freelancing which comes with a feeling of being your own boss and a sense of freedom. But hey, wait a moment, there is a flipside too. A freelancer doesn’t have the luxury of a steady cash flow, like a monthly salary for an employed person. This makes managing finances all the more necessary for a freelancer as he is always in an unpredictable zone, financially. Fret not, we’ve got you covered. Here’s how –
- Maintain separate accounts for finances
Having a separate account for business and personal transactions always helps and helps you keep a check on where your cash flow is heading. Think of maintaining business account for all the official transactions and decide upon a fixed amount which you transfer to personal account as an income to yourself.
- Keep a tab
Cultivate the habit of recording your transactions related to inflow and outflow of finances. Recording all the expenses like invoicing, office expenses etc. will help you keep a track. You will also realize you can manage your finances much efficiently with all the details. These details will also come handy while filing the tax returns.
- Have an emergency fund
This is for the liabilities which may arise due any type of expense ranging from personal needs to financial downslides. The situation may turn all the more scary if you deplete funds for other purposes. Thus, set aside a fixed amount from the savings into the emergency fund to keep yourself covered against contingent liabilities.
- Start tax-planning early
Knowing how much you need to pay in terms of taxes will help you in managing your income. This way you’ll set aside a fixed amount for tax purposes and will not result in depleting your savings. It is advisable to look up for tax-planning websites(many available on the web) or seek services of an accountant.
- Have a corpus for planned needs
Set aside a fixed amount into a savings account from the income which comes in handy for planned goals like vehicle purchase, college fees etc. Financial planners recommend having a safety net with income of 5-6 month earnings which can be drawn for desired purposes. You can invest this money in Fisdom’s Smart saver feature which offers instant redemption and gives returns better than a bank savings account.