*Disclaimer – I also have a full time in addition to freelance writing. I do have some expenses that I pay for exclusively with money I make from freelancing, however, I have a good idea of the types of planning that is required for these situations.
If you are relying on freelance writing as your sole source of income, you’ve undoubtedly experienced some pretty difficult situations. One of things most freelancer writers struggle with is the fact that they aren’t getting a steady paycheck. It can be very difficult to play out expenses, save for retirement, or even have a simple emergency fund when you’re never really sure when your next paycheck is going to arrive.
To make matters worse, since you won’t qualify for unemployment or other safety programs as a freelance writer, it is more important than ever to have some money saved up for those times when very little is coming in. The following tips and tricks will help you to manage your money better when you have a lot coming in, and help you to get through those times when you’re not sure where your next dollar will come from.
Know Your Expenses
When you’re living on an unpredictable income, you need to know exactly how much money you’ll need to survive. You should start with a list of your expenses that you absolutely can’t go without. For example, things like your electric bill, house payment and things like that are necessary. Money to go out on a date or have that bottle of wine, however, are not. When you know exactly how much you need to make to survive, you’ll be able to plan better.
List Expenses from Essential to Optional
When you’re making a budget, make sure you start with your most essential bills, and work your way down. On good months, you’ll be able to pay all the bills on the list, and even do some saving. On bad months, however, you might only be able to get to the first few on the list. With this in mind, it is essential that you’re paying the bills that are most important. The list may change slightly from month to month, but in general you’ll want to pay for food, housing, electrical, gas and internet first. (Internet is a necessity for freelance writers).
Savings is Essential
Adding on savings near the top of this list is also a good idea. After you’ve gone through all the most important bills for the month, you should be putting money away for emergencies, or those months when you’re not making enough. You won’t likely be getting a 401(k) or pension as a freelance writer, so you need to make this a priority! If you can have at least 3-6 months of expenses saved up, you’ll have much less to worry about financially. Of course, this is easier said than done.
Keep Excellent Records
You need to know exactly how much money you’re making, where it is coming from and where it went. This is important for things like planning, but it is also critical for running your freelance writing business. By keeping good records, you’ll be able to identify trends and better predict your income, which is very important. You can also see what impact different things might have had on your income. If, for example, you started advertising your services in March and you see your income doubled in April, you know that the advertising was very effective.
Diversify if Possible
If you’re a freelance writer, consider starting your own blog or create an authority site. These types of things don’t pay out well today, but over time they can be a good source of income. The more income streams you have coming in, the easier it is to predict how much you’ll earn from month to month. As a writer, you have the ability to create profit-producing websites for very little expense (since you can write your own content).
Always be Looking for New Clients
Many people make the mistake of finding a few steady clients, and then just relaxing and working for them without seeking out new ones. This can be tempting, but if one of these clients leaves, it can leave you in a bad position. In addition, the best time to look for new clients is when you don’t actually need them. When you’re in this type of situation, you can be much pickier on who you accept, and demand higher rates of pay. If they don’t hire you, you’re not going to miss any meals.
I’m sure there are many other great tips and tricks freelancers have to help get through the slow times, and I’d love to hear them. Share your experiences in the comments below.