Being a freelancer means you get to be your own boss! You can work when you want and choose the jobs that you like. But it also means you have to be careful with your money. Let’s learn how to plan your finances and manage your taxes.
1
Keep Track of Your Income
When you work as a freelancer, you might get paid at different times. Sometimes you get a lot of money, and other times you might not get as much. That’s why it’s important to keep track of all the money you make.
Action Tip: Write down every time you get paid. You can use a notebook or an app to do this.
2
Save for Taxes
When you’re a freelancer, no one takes taxes out of your paycheck like they do for regular jobs. This means you need to save some of your money to pay taxes later.
Action Tip: Try to save about 25% of what you make. For example, if you make $100, put $25 into a savings account for taxes.
3
Create a Budget
A budget is a plan for how you will spend your money. It helps you make sure you have enough for important things like food, rent, and savings.
Action Tip: List your expenses (like food, rent, and fun activities) and make sure you don’t spend more than you earn.
4
Set Aside Money for Slow Months
Sometimes, you might not have as many jobs, which means you won’t earn as much. It’s a good idea to save extra money when you’re earning a lot so you can use it during the slow times.
Action Tip: Keep an emergency fund with at least three months’ worth of expenses. This will help you feel safe even when work is slow.
5
Pay Your Taxes on Time
As a freelancer, you may need to pay taxes every few months, not just once a year. These are called “quarterly taxes.”
Action Tip: Mark your calendar to remind yourself when taxes are due. This will help you avoid any late fees.
6
Keep Your Receipts
When you buy things for your work, like a computer or software, keep the receipts. These can help lower the amount of taxes you need to pay. If most of your purchases are digital, then having a separate bank account helps you keep everything in one place.
Action Tip: Put your receipts in a folder or take pictures of them. This way, they’re easy to find when you need them.
7
Get Help if You Need It
Taxes can be confusing, and that’s okay! If you’re not sure how to do something, it’s a good idea to ask for help.
Action Tip: You can ask an accountant or use tax software to help you with your taxes. This will ensure everything is done correctly. I would recommend Turbo Tax Live Assisted Business, which might seem pricey but is much cheaper than getting audited or hiring a dedicated accountant.
Conclusion
Being a freelancer is awesome, but you need to be smart about your money. By keeping track of your income, saving for taxes, and budgeting your money, you can make sure you’re always prepared. Remember, planning ahead is the key to success!
