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As a freelancer, your financial situation can look different. See how to prepare.

Key Point

  • Like office workers, freelancers need to keep an eye on their finances.
  • Self-employed people may need to change some of their financial habits.
  • We recommend that you consult an accountant, track your spending, and plan to take time off from work.

If you’re just starting out as a freelancer or considering a career change, you’re probably excited about the potential for changes in your work landscape. Many workers become freelancers because they value flexibility, independence and freedom.

But just like with regular job opportunities, it’s essential to consider how the economy changes when you take on new job opportunities. Finances are in place because you can coordinate departments and plan.

There are some money moves to consider if you are a freelancer.

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1. Talk to an accountant

If you’re new to freelancing, it’s worth consulting a tax expert. An accountant can help you make sure you’re financially prepared for the career change you’re about to make.

They can guide you in making the right financial choices, such as helping you figure out how much money you want to set aside for freelancing taxes.

Additionally, it can be a valuable resource when preparing and filing taxes.

2. Holiday planning

There will be days when you don’t want to work, days when you’re sick and you can’t work, and days when you’re on vacation. As a freelancer, you should plan your holidays.

Unlike traditional salaried workers with paid leave, employees do not get paid when they take leave. Because you only get paid for the work you do.

Instead, you can plan and save money to be available in case you need to step away from your work responsibilities. The last thing you want to worry about when you’re recovering from an illness or spending time with your loved ones is money.

3. Automate your savings

No matter what your savings goals are, automating your savings process can be beneficial. By doing this, you can be sure that you will reach your goal. As a freelancer, this is especially useful. Because when you’re managing your own business, you get busy.

4. Pay quarterly taxes

As a freelancer, you are self-employed. In other words, you are responsible for saving and paying income tax. We encourage you to get into the habit of saving money regularly and paying your taxes quarterly. By doing so, you can avoid paying a penalty. Also, it might be less of a burden to make quarterly payments than to send a huge check each year.

5. Track business expenses

It’s also a good idea to track business expenses throughout the year. Eligible business expenses are tax deductible and help reduce your tax liability. Being organized and keeping detailed records can save time and minimize stress.

6. Don’t neglect the cost of health insurance

If you want to get health insurance, you should do your research before becoming a freelancer. If you can’t hop on a partner or spouse plan, you’ll need to purchase a policy, which can cost more than you think. Compare insurance options to see if you have the opportunity to lower your premiums without sacrificing benefits.

7. Record the time

Some freelancers charge hourly rates, while others charge project-based rates. However, regardless of the payment method, it’s useful to track how long it takes to complete a task. This allows you to make more informed decisions about which projects to undertake.

As a freelance writer, I am paid per project. Tracking how long certain types of projects take to complete is a huge benefit to me. This way, you can adjust your workload and focus your time and attention on the projects that will generate the highest overall revenue.

Do you charge project-based fees? Don’t focus on the amount without considering the work involved. Some projects may cost more, but may require more work.

Your finances should remain a priority

Making the money moves above will allow you to better manage your finances while navigating being a freelancer. could be a great choice. Be sure to consider how your finances will change in your new role.

For more money management tips, check out these personal finance resources.

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