Wednesday, September 26, 2018

MONEY MANAGEMENT TIPS FOR FREELANCERS



What is a freelancer?  It is basically a self employed person offering business or service, to one or more clients at a given time.

I have been a freelancer for 5 years now.  In 2013, I opted to terminate my contract as a writer in the biggest TV network in the country.  I was not a regular employee there, but I was working as a "regular talent" from the time I graduated in 1992 till 2013 -- that's 21 years of being a TV writer!  As a regular talent, I was given minimal benefits, which were only given to me in my last 5 years with the company.  There was no security of tenure. 







The things that I mentioned above, were basically the same things a freelancer have to combat.  While there are several benefits to being a freelancer -- being your own boss, flexible working schedule, sometimes you can work at home, accept projects that you really like -- there are also numerous disadvantages.  And the one I fear the most -- the unpredictable income. I don't know when will the next project will be?  In between projects, how do I stay afloat amidst monthly bills, inflation and emergencies.

The answer I guess -- is to properly manage your money and finances.   Let me share with you a few tips I have diligently following all these years:


FOLLOW A BUDGET. ALWAYS.

Because I don't know when will the next income will come or hit my paypal account - I always compute for the LOWEST possible income that I can possibly get.  I will need to subtract from it the BASIC NECESSITIES that you cannot take for granted -- monthly bills, food, teens' allowance, insurance premium, paying debts, monthly amortization, tuition and tax payments.

I allocate 25% of my earning to these basic necessities. 

The next 25% -- I reserve for expenses related to my work as a freelancer, which includes: transportation fee, food if I go out on meetings, electricity, internet charges, mobile phone load.

The bigger chunk, 50% goes to savings.  You might ask, why 50%?  Its so BIG!  This is where I get the money for investments and emergencies.  



When life is good, and projects are abundant -- I always SAVE for the rainy days. I prioritize SAVINGS and INVESTMENTS.  I can sometimes become an OC-saver -- wala pa sa kamay ko ang sweldo o bayad, naka budget na!  Trust me when I say, budgeting entails a lot of discipline. 

When life isn't that good, my last resort is to revise the budget. I would sometime make drastic cut offs: give up gourmet coffee or expensive meat for a while;  or find ways on how to save on electricity;  text instead of calling;  Bottomline, stick to a budget and not go overboard!


HAVE AN EMERGENCY FUND

It is of utmost importance that everyone has an emergency fund!  Also, during "lean days" when projects are scarce, this is where I get extra money for expenses.  But when business is booming, I always prioritize building my emergency fund.


PAY OFF DEBT

I always pay my credit card debts on time.  I simply don't want to pay for credit card interests.  It is not WISE.

When we applied for housing loan, we chose the 10-year plan versus the 15 or 20 year plan.  We paid for a higher amortization rate, but the shorter years spent paying, gave us more financial freedom.


GET INSURED

Freelancers have to take care of themselves. They need to assured that in times of crisis and emergencies, they will have money stashed somewhere, that can at least, give you peace of mind.


HMO PLAN: 
You don't know when an illness will strike. You may be very healthy today, but tomorrow is another story. Six years ago, I was diagnosed with an illness that required so many medical tests and expensive medicine. Good thing was, I was wise to invest in a health card.  Now, my husband, took on the responsibility of providing HMO plan for the entire family.


HEALTH INSURANCE:   
Now that I am not getting any younger, as a birthday present to myself this year, I am getting another health investment.  My choice is an insurance that is also an investment-linked life insurance plan; something that provides me with a complete life, accident, disability and health protection benefits, of course, with potential for wealth accumulation.


In the coming years, I am very sure that we will be seeing the growth in numbers of freelancers -- or the gig economy as we like to call it now.  Keep in mind that freelancers are in the unique position to be in control of how much they earn.  It's all about taking on more work, or asking for a good deal for your work.  When money comes in, always be WISE to save, invest and manage your money.