How to Manage Your Freelance Income

Freelance work is rewarding, but it can also be incredibly stressful. Can you guess what the number one thing is that stresses freelancers out? It’s not deadlines, and it’s not interacting with clients; it’s cash flow. Cash flow is incredibly important to a freelancer, and when you can’t guarantee that payments will come in when you expect them to, you could find yourself in trouble. Here are some tips that can help.

Create an Emergency Fund

It is vital to have a backup fund available that you can dip into when payments are late coming in, and you have bills to pay. Work out how much your expenses are each month, and try to set aside at least double that – more if possible.

Open a Separate Business Account

Whilst it’s legal to use the same bank account for your personal life as well as your business, it’s not recommended. And, not only will having a separate account make your accounting a lot easier, but it will also help you to understand how much money you have available. Use your business account to pay your salary and to cover business expenses, and use your personal account for everything else.

Project Your Monthly Income

When you freelance, you will have some times that aren’t as busy as others, so it’s important to try and project your monthly income. You could either take this as an average figure, or budget for the lowest income figure you’ve had to date. Don’t be afraid to seek out short term loans if you need them either, to help cover your expenses.