One of my clients is in the debt relief industry and I must say, it is one of the most interesting and educational projects that I had ever been involved in. Because of that, I thought that maybe I should write some money management lessons that I have learned so far.
The thing about freelancing is you are not guaranteed the same income every week. Sometimes the projects are overflowing and the income is more than what you really need. In some cases, you barely have enough to live on.
I guess what I really want to send across is this: make sure you prepare for the lean moments when your cash flow is not as strong as you need it to be. Here are three tips that I believe can help you.
Learn how to budget.
Budgeting is something that I had been doing even before and I must say, the relevance of it has grown stronger for me. This can get quite tedious, especially when you are taking note of every expense. However, I noticed that it allowed me to identify how much money I need to target in order to have more than enough for our monthly needs. Although my husband has a day job that brings in income regularly, I still need to shoulder some of the expenses if we want to live conveniently and comfortably.
Spend only on what you need.
Through my budgeting efforts, I noticed one trend that I really think we should work on: whenever our household income increased, our expenses also grew. I think it is all but natural for us to want to reward ourselves when we bring in more money but I think it is not the healthiest of habits for your finances. When your income grows, I suggest that you make your savings grow – not your expenses. Sure, a reward may be in order but control it. Do not splurge because saving may prove to be more rewarding in the long run.
Save for the rainy day.
This is such a cliché I know. However, your savings will literally save you. For instance, when my father-in-law passed away early this year, my husband and I had to help with all the expenses. Our savings allowed us to do that without sacrificing our usual expenses. Not only that I could take the week off from work to be able to attend to the needs of my family. For others, it can be the car breaking down or an unexpected illness in the family. These can all be financed by your savings – you do not have to put yourself in debt for it. Also, during the lean times when projects are slow, I will not worry because I know that we have built a financial security net for our family.
All of these give me the peace of mind that even if I end up without clients for a couple of weeks, we will be alright. Now, my husband and I are working on a supplemental source of income since we are saving up to buy a home in the next few years – in cash. Anyway, wish us luck and in my end, I will wish that you can implement the right management skills that will keep you financially secure as you grow in your freelancing career.
Till the next article!