Working as a freelancer can be a liberating experience, whatever role and industry you may be involved in. It has all the perks of being able to work around your own schedule, in the comfort of your own home and take on only work you wish to do. The main downside is that you do not have the financial security of a full-time position and salary. For this reason, there are various rules you must follow to secure your finances.
Sort Out Your Taxes
Anyone who works for themselves is technically self-employed and must be registered with HMRC as such. This needs to be done to ensure that you pay the correct amount of income tax and national insurance. If you fail to do so and are caught, then it can lead to a large fine and worsen your financial situation. With some companies, they may sort out your tax arrangements anyway, so check with them first.
Focus on More Not Less
A good strategy to make sure you do not overspend is to create a weekly or monthly budget and stick to it. This can be used to highlight areas where you can cut back on spending. However, to avoid living a frugal life and constantly worrying about money, a better idea is to try and increase your income instead. Don’t do this to the point where you must work 14 hour days, but seeking new and better paid opportunities will be worthwhile.
Save for the Future
Having a savings account and emergency fund is useful for everyone, but especially freelancers who live with the risk of their income immediately slowing down. Putting some of your pay towards your future is a good idea with a self-invested personal pension (SIPP), which providers like Bestinvest can provide further information on. When cash flow is unpredictable it is important to get a good balance between what you invest in your future and how much is spent now.
Use Financial Technology
One of the easiest ways to help you follow these rules is to make the most of the many financial technologies available. There are a lot of budget apps that can be downloaded, some for free, to help with sticking to your financial plan and meeting savings goals. Some you will have to manually enter any incomings and outgoings, while others can track this automatically.
Follow these financial rules and you should find that being a freelancer in any industry is a profitable and enjoyable career path.