Entering the world of work as a junior freelancer brings with it many different challenges and responsibilities. Not only will you need to adjust to going solo and being responsible for your own workload, but you also have to manage your personal responsibilities, particularly when it comes to your finances. There are some financial challenges that freelancers face compared to those working in permanent roles, not least that your income will be less predictable, particularly when work is hard to come by.
But going freelance also gives you the opportunity to potentially earn more, as you can largely often dictate how much work you complete. The freedom that comes with earning your own income is an exciting prospect, but it also requires a certain level of responsibility and maturity to manage it properly. Failing to look after your financial wellbeing won’t only affect you in the short-term, it could impact upon the type of lifestyle you lead further down the line.
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As a result, it can be useful to be aware of the best ways to manage your finances when working in a junior freelancer role, to help set you up for success as you progress through your career.
1. Create a budget and track your expenses
Particularly if you went to college, you will already have some knowledge about the importance of budgeting your income. However, whilst at college you’re likely to have had a short-term view of your finances, and just do enough to get by. But when starting in the world of work, it’s important to take a more holistic approach.
As a freelancer, you will hopefully know roughly how much money you can expect to come in every month, allowing you to plan your budget accordingly. Be sure to divide your income between the essentials, the non-essentials and savings, and find a split that works for you.
2. Stay disciplined with your spending
Following on from the previous point, it’s important to be disciplined with your spending – just because you have the money doesn’t mean you should spend it. It’s easy to get caught up in the moment and impulse buy things, particularly with the rise of influencers and social media advertising, but irresponsible spending can lead to financial problems down the road.
If you stick to only buying what you need, you’ll be in a much better financial position – there’s no shame in being mindful of your finances and living within your means. Failing to do so could mean you start to rack up hefty debts, which can ultimately harm your future financial health if they get out of control. Particularly if you have a credit card, it’s crucial to avoid overspending and falling into debt that you can’t pay back each month, as this will affect your credit score and your credibility as a responsible borrower.
3. Investigate financial perks
Going freelance can feel a little overwhelming, especially if you’ve previously worked for a company who offered you health insurance, a pension and a comfort budget for setting up your home office. When you’re starting out, make sure to do some research to see if you’re eligible for any local or national discount schemes. People under 30 may find that they can get discounted subscriptions or transport, and there are health insurance schemes that reward you for being active with money off vouchers.
It’s also important to be aware of any expenses you can claim from the companies you’re completing work for. Whether that’s money spent on additional utilities when working from home, or travel costs for going into an office space, find out what you can reasonably expect to claim back and make sure to keep on top of it.
