Freelancing seems like a dream to anyone. You get the opportunity to choose who you work for, when you work, and for how much money you offer you services. It’s like having your own business and you are your own boss. Moreover, it is a great way to get paid while doing what you love.

However, freelancing also comes with a few downsides when it comes to finances. First of all, you are working in an industry where there are no steady paychecks. Plus, being your own boss also means being responsible for your own financial obligations, be it personal or professional. Thus, whether you are a part-time or full-time freelancer, you must 
be smart about how you manage your finances. Here are 6 financial tips that every freelancer should know to organize and manage their finances better: 

Keep personal and business finances separately

One of the most common mistakes freelancers do when it comes to managing their money is failing to keep their personal and business finances separately. Having separate accounts for your personal and business money is key to easily tracking your income and expenses. Plus, it is also a lot easier to find what business expenses you can deduct on your tax return. 

Being a freelancer means that you don’t have a regular income which can be extremely confusing to keep a budget. Depending on your income, your expenses can also vary. So, it can be really difficult to understand your money when there are numbers that vary from a month to another. 

Plus, keeping your personal and business accounts separately saves you a lot of time and nerves to determine which ones are personal transactions and the ones that are from your freelance business. So, you will have a clear record to look at when you must pay taxes and verify your business’s growth. 

Calculate your freelance income and your expenses

Organizing and managing your finances is all about properly understanding your income, expenses, and financial obligations. The key to keeping a budget and avoiding difficult financial times is to be smart about the numbers in your budget. However, in order to do that, you must understand exactly where you are at the moment.

As a freelancer, you don’t have a regular income every month because that highly depends on your clients. However, you can get an idea of how much money you make with your business. If you are a new freelancer, it can be difficult to know how much to charge and to understand your income. 

According to a 
2018 Payoneer Freelancer Income Survey, the worldwide average hourly rate for freelancers is $19. However, the rates can range from $11 to $28 depending on the services you are offering. The best way to calculate your income and determine how much you should charge is to use a 
salary converter that will help you make an informed decision when considering what hourly rate to offer. After you decide how much to charge, it will be easier for you to keep track of your incomes and calculate your income. 

Also, calculating your expenses is just as vital as calculating your income for financial health. You need to consider both your personal and business expenses to ensure that you are staying on top of your financial obligations. 

Be financially prepared for ups and downs

The biggest drawback of freelancing is having unsteady paychecks. Unlike working as a full-time employee at a company, your monthly income highly depends on how many clients you have and how much work you complete throughout a month. 

Thus, since you will most likely earn vastly different amounts from month to month, you need to be prepared for both ups and downs. Even if you experience growth with your business and your earnings, you need to have a realistic sense of your average income. Some moths can be very profitable. However, some can be really difficult in terms of money. 

The key to avoiding difficult financial times is to be prepared for the moths when your business isn’t thriving. Start by considering how much you have earned the previous year and divide the amount by 12 to understand your average monthly earnings. Most likely, the amount you will earn this year will be more or less the same. So, you can use these numbers as a baseline for your expected budget. 

Also, one crucial thing to do is to open a saving account.  Unsteady paychecks translate in less profitable months sometimes. So, be smart about planning for these moments by putting some money aside in your saving account when your earnings exceed your expenses. 

Have a tax budget

If you were an employee, your taxes would be taken out from your paychecks before you even see it. However, freelancing means that you are responsible to pay your own taxes at the end of each year. Since you don’t have taxes that will be withheld from your income, you have to pay for estimated quarterly tax payments. Thus, it is essential to put money aside for the moment when you will have to pay your taxes. 

One smart and easy way to keep a taxes budget is to set up a separate fund where you 
make a monthly deposit for your taxes. This way, you will make sure that you can pay your financial obligations when it comes the time for it and that you won’t overspend your earnings. 

Use technology to manage your finances

When you have unsteady paychecks that translate in ups and downs, you may be struggling with financial management. Luckily, thanks to today’s technology, managing your money and keeping track of your earnings and expenses has never been as easy as today. 

The technology that can empower you to manage both your personal and business finances easily lays right in your pocket. There are a number of budgeting apps that you can download and 
move your finances into your smartphone. They come with tons of features and budget tools that will help you keep track of your income and expenses. 

Get more projects

Being a freelancer is very similar to running your own business. You are in charge of managing finances and 
promoting your services to find clients. The better you manage to attract more clients and projects the less financial worries you will have. Thus, one vital key to having financial health is to find ways to increase your income. 

Being smart about managing finances as a freelancer is essential because you no longer have a steady paycheck that you can count on every month. It takes good budget tracking and being very considerate about your financial obligations to stay healthy financially. 

Author's Bio: 

Cynthia Madison