Even with irregular project based incomes, adopting money management goes a long way to developing financial stability. Here we are a few tips for freelancers that will build a great foundation for financial freedom.
Emergency Fund: This has to be planned for a year in advance and should be sufficient to cover expenses in case of a serious emergency. You must build a habit to accrue this fund and make sure that it is liquid, which means it should be available in cash whenever you need it. Also, always rely on a good insurance provider and take a premium medical and health insurance plan for the whole family, if your family members are dependent on you. This is very helpful because usually you and your family will not be covered under any employer insurance policy.
Tax Budgeting: Freelancers have to pay taxes on their sources of income by themselves which is different in case of an employee. You need to have knowledge about the local tax system of your country and align your expenses in accordance with it. Also, freelancers in some countries are provided with special tax benefits and make sure you are compliant with those and take the advantage of such government initiatives.
Second source of Income: As a backup — It is always advisable to have a second income or a passive income that is generated regularly without much effort. A few freelancers host people in their house and earn some rental income and a few work as tutors or mentors. It is good to have a second source of income with a minimal effort and this can help you give some financial freedom.
Invest in low risk portfolios: Investing in low risk and blue chip stocks is also a good strategy to manage money. It is advisable to look for stocks based on the past performance and make sure that their services have an impressive growth in the future. Some standard FMCG, financial services, utilities stocks are universally well performed and maintain a growth trajectory in the longer run.
At Friz we want to create a world of complete financial inclusion for freelancers. We would advise you to check Friz financial services like invoice financing and credit line that enable cash flow management in the short run and help you plan your financially independent future on your terms.