7 Money Transfers Every Freelancer Should Do

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As a freelancer, your financial situation may vary. Learn how to prepare.

key point

  • Like salaried workers, freelancers should keep an eye on their finances.
  • Self-employed individuals may have to change some of their financial habits.
  • It’s a good idea to consult with an accountant, keep track of your expenses, and plan your time off work.

If you’re new to freelancing or thinking about changing careers, you might be excited about the possibilities of a different work environment. Many workers become freelancers because they value flexibility, independence and freedom.

But similar to regular job offers, it’s important to consider how your financial situation may change when you accept a new job offer. By taking the time to do this, you can adjust some financial habits and create a plan so your finances are in good shape.

If you are a freelancer, here are some funding moves you should consider.

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1. Talk to an accountant

If you’re new to freelancing, it’s worth talking to a tax professional. An accountant can help ensure you are financially prepared for the upcoming career change.

They will be able to guide you in making appropriate financial choices – such as helping you understand how much you want to set aside for freelance taxes.

Plus, they can be a valuable resource when preparing and filing taxes.

2. Plan your days off

There are days when you don’t want to work, are too sick to work, or want to take time off to go on vacation. When you are a freelancer, you have to plan for time off.

Unlike traditional salaried workers who take paid time off, you don’t get paid while on vacation. That’s because you only get paid for the work you do.

Conversely, if you need to get rid of work responsibilities, you can plan and save for a rainy day. When you’re trying to recover from an illness or spend time with loved ones, the last thing you want to do is worry about money.

3. Automate your savings

No matter what your savings goals are, automating the savings process can be beneficial. Doing so will ensure that you stay true to your goals. This is especially useful as a freelancer since life can get hectic when you manage your own business.

4. Pay your taxes quarterly

As a freelancer, you are self-employed, which means you are responsible for setting aside and paying income tax. It’s a good idea to get into the habit of saving money on a regular basis and paying taxes on a quarterly basis. By doing this, you can avoid paying fines. Paying quarterly may also be less of a hassle than sending one huge check every year.

5. Track your business expenses

It’s also a good idea to keep track of your business expenses throughout the year. Eligible business expenses are tax-deductible, which helps reduce your tax liability. Staying organized and having detailed records saves you time and minimizes stress.

6. Don’t overlook the cost of health insurance

If you want to get health insurance, you should do your research before you become a freelancer. If you can’t enroll in your partner’s or spouse’s plan, you’ll need to buy a policy, which may be more expensive than you realize. Compare policy options and check for opportunities to reduce premiums without sacrificing benefits.

7. Keep track of your time

Some freelancers charge by the hour, while others charge a project-based fee. But no matter how you’re paid, it’s beneficial to keep track of how much time you spend completing tasks so you can make more informed decisions about the projects you’re working on.

As a freelance writer, I get paid per project. Tracking how long it takes me to complete certain types of projects has benefited me a lot. By doing this, I can adjust my workload and focus my time and attention on the projects that give me the highest total income.

Do you charge project-based rates? Don’t just focus on the dollar amount without considering the work involved. Some projects may pay higher rates, but they may require more work.

Your finances should remain a priority

By making the aforementioned money transfers, you can better manage your finances while you become a freelancer. Life as a freelancer suits many people and may be a great option for you. Make sure you consider how your new role will change your financial situation.

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

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