How to Organise Your Finances Being a Freelancer?
Working as a freelancer means you have a wear a lot of hats. Being smart about your finances will allow you to continue to operate smoothly. Here are some ways to help you through the ups and downs of the freelance life.
1. Know Your Worth
Charging a below par rate is going to hurt you, over time. Talk to your peers and know the general rates. Sources like ArtPact, Glassdoor, etc. help find out the hourly and per piece rates for illustrations and such.
2. Budget for Taxes for Freelancers
Freelancers pay at a higher tax rate. Consider this when you quote your prices, and budget for this when you have expenses. Virtually, all work related expenses can be written-off as business expenses. Find out all possible allowed business expenses that you can claim as a freelancer. Be sure to keep your personal and professional spending separate.
3. Consistent Clients
Try to have consistent clients so you know that you will be making a certain amount per month. Also, don't put all your eggs in one basket. Try to have a couple of different clients, so even if one stops commissioning work, you won't be out of work.
Be prompt about sending in your invoices as soon as the job is done. Most of the bigger companies have fixed billing cycles so if you are late and don't send your invoices in by a certain time, it might take up to the next cycle to get paid.
5. Passive Income
It's always great to supplement your commissions with passive income. This means that you can generate revenue with minimal effort, based on the work that you have already done. Examples of this would be Print on Demand (POD) services for prints, licensing; selling content like tutorial videos, brushes, and so on.
6. Plan Downtime
Plan for the downtime and try to save up at least 3-6 months of your basic living expenses. When you start out keep your overheads low, embrace the frugality till you know you have saved up enough to not panic if the work dries up for a while.