If you’ve taken the plunge into writing for a living, or indeed if you have any other form of freelance work on the go, financial security is going to be one of your biggest concerns. Freelancers often talk about the “feast or famine” phenomenon, where one minute you’ve got so much work you’re never off the laptop, and the next you’re twiddling your thumbs scraping about for anything work at all. That kind of income fluctuation can make it difficult to manage your money, which is all the more reason why you need to be smart when it comes to looking after your finances.
You may think that having a fluctuating income would make it hard to create a sensible personal budget, but it can be an invaluable tool for people in just that situation. It’s essential to know precisely what your outgoings are so you don’t get caught out, and anything you can do to avoid the stress of financial insecurity is worth putting some effort into, so spending a few hours setting up an accurate budgeting tool is a sensible investment of time.
Regular fixed expenses are easier to manage, but the ones that come up annually or quarterly can be a real headache, and the unforeseeable costs even more so. You might for instance budget $500 for a service and any repairs on your car, then discover the actual bill is going to be more like $1500 or even higher. You might have to put the extra $1000 on a credit card, then start paying interest and end up with a costly debt. You have several options to help you cover these kinds of expenses:
- Set up a contingency fund that you pay into during your feast periods when the money is coming in. You can then dip into this fund when income is reduced.
- Make use of installment payment options wherever they’re available, so all your major costs are spread across the year. There are very few bills and purchases that can’t be paid for this way, and even if there is a small charge for the service, it could still end up being less expensive than paying interest on your credit card or overdraft fees.
Once you’ve set up your provisional budget, you can see how well you’re likely to be doing in a year or longer, and if you’re heading for the red, you can make decisions about cutting back in some areas, or looking for better-paid work — or both.
Once you’ve sorted out your projections and set up your systems to cover your expenses, you should set up a savings account to make any surplus cash work for you when you’re not using it. Have a look at the best savings accounts of 2019 to see which accounts will give you the highest returns, or if you have a large surplus, consider some form of personal investment as well.
On the subject of investments, how are you placed for life insurance and medical cover? A large medical bill could be financially ruinous if you haven’t got cover. You should also consider the long-term future and look at investing in retirement savings plans. Pension age may seem like a long way off, but it’s scary how soon your senior years creep up on you, so it’s never too early to be looking at providing for your retirement.
During your ups then, when you’re earning well, you’ll be able to cover your living expenses and put some cash aside as well. When the days are less fruitful, don’t sit around waiting for work — go out and look for it. Register with freelance agencies, advertise your services, create a blog, work at your pitches; there are many ways in which you can drum up new business. It’s a good idea to do this even when you’re financially secure, because you might well find work that pays better or that you enjoy more in the process.
It’s better to be in a position to pick and choose between job offers, because you can work at what you want to do rather than what you manage to find. You might find that fewer, higher paying jobs provide you with a better quality of life, and give you the time to pursue your longer-term goals, such as working on your novel or business guide, or creating a new business.
You might have worries about financial security as a freelancer, but you won’t ever lack for opportunity, so sort out your finances now and devote your time to achieving your goals without the stress of any money troubles.