Essential Money Tips for Every Freelancer

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Flexible work hours, sleeping in, being the boss of you and your work schedule, unlimited holidays – freelancers are used to dancing to their own beat. This fluid and seemingly all-fun lifestyle comes with roadblocks of its own – taxes, no CPF, irregular income, no insurance benefits and other dull details than are totally capable of derailing your merry, wine-with-lunch lifestyle.

Read on for money tips that will help keep you sleeping in on Mondays and going for that goblet at lunch time!

1. Stabilise your income

‘You don’t have a stable income. Get a real job’. This is what the little voice in your head keeps repeating, right? Well, you are not being paranoid and it’s not time to set an appointment with the shrink. The absence of a regular income is a real issue with most freelancers. And the source of most of their worries.

What you should do:

Diversify: Don’t put all your eggs into one proverbial basket – it’s bound to crash into a smelly mess. Work with more than one major client; you are going to need a backup sometime. Stability from multiple sources of income also allows you to be picky about what jobs you accept and setting a rate for your work that suits you.

2. Organise your finances

There is no such thing as ‘organised enough’. Especially when it comes to the erratic finances of a freelancer. Worry not, help is near – all you have to do is decide to compartmentalise your needs into the ‘real’ stuff and the ‘certain’ stuff. Let us elaborate. The real stuff is the cycle-of-life issues like your living expenses, overheads, retirement, and savings. The certain stuff is more hard core – we are talking taxes, accountants, emergencies, and sickness.

What you should do:

  • Arm yourself with a separate business account: This will help you to compartmentalise your finances for easier review.
  • Stay on top of your taxes: Since it is going to be your responsibility to pay taxes, download an app that helps you with accounting or hire a professional. Open another account to siphon away the amount every month for safe keeping. A wise man said, ‘nothing is certain but death and taxes’ so don’t let the inevitable at the end of every financial year cramp your style.
  • Create an emergency fund: This is different from your savings fund. It should have enough to last you at least six months in case of a prolonged lean period at work. It also empowers you to choose the projects you wish to take up. Very good for the ego!
  • Go down the insurance road: Select insurance for health, accident, life as well as disability. Remember, that as a freelancer, you are not on the sick leave and health benefits boat. And an apple a day is not always going to keep the doctor away!
  • Consider retirement and savings: The day will come when the cash register stops ringing. Budget your income in such a way that you are able to stash away enough for the future.

Related: 7 Habits of Successful Investors

3. Use credit cards to your advantage

Credit cards, used carefully, can turn out to be quite a boon for a freelancer. With your income lacking consistency and your expenses being as consistent as the North Star, there has got to be a simple way to bring order to your life. Enter the carefully chosen credit card.

What you should do:

  • Choose a credit card that complements your financial lifestyle: We are not talking about one that is only big on rewards and perks, rather one that allows you to stagger your expenses. The OCBC Cashflo Credit Card, for example, converts all spends into an interest free instalment plan and spreads it conveniently over 12 months. Perfect for the freelancer without a regular flow of income.

4. Address your CPF blues

So you don’t have CPF. Boo-hoo. One of the perks of being on the employee bandwagon is CPF benefits. As a freelancer, you are not getting those anytime soon. That said, you now need to fight your own battle.

What you should do:

  • Create your own CPF: CPF is essentially a compulsory savings scheme for employees to help fund retirement, housing, and healthcare. You can help yourself by signing up with another client. Yes, more work means more income, translating into more saving. Just remember to channel all income from this client to your very own fund!
  • Identify an area where you save money: Because of being a freelancer – let’s say no rent because you work from home, no spending on a work wardrobe, or a zero commuting bill because all you do is walk to your desk. Quantify this amount and add it to your fund every month – religiously. It is the best you can do to make up for the CPF deficiency.

Related: Investing with Your CPF Savings: A Quick Guide to Get Started

Tell us if you have more ideas on how to save money while freelancing? We also recommend checking out these helpful books at leisure to learn how to become wealthier and wiser.


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