A study completed by Forbes revealed that 58% of freelancers have not been paid for their work at least one time. Although there are many positives to being an entrepreneur or a freelancer, one downside is that pay can oftentimes be inconsistent. This is especially true when first starting out as a business owner, when one’s client list and paychecks are usually at their smallest. Even when you receive a consistent paycheck from a traditional employer, budgeting and planning for the future can be rough. This is made even more difficult when facing the most common financial challenges of a laptop lifestyle.
While there are financial hurdles for nearly all freelancers/entrepreneurs, there are strategies to effectively overcome them. Explore three tips for staying financially stable as someone who is newly self-employed.
Consider applying for a loan to fund your new career path
Money.com reported that the average freelancer in the U.S. makes approximately $31/hour. The same report notes that this is 17% above what the average full-time employee makes in a traditional employment setting. However, at the start of your new career, it isn’t likely that you’ll be making this much in the first month (or even in the first few months). If you’ve already started freelancing or running a business, and are running into some cash flow challenges, you might want to consider applying for a loan to fund your new career path. Whether you need money for business expenses, or simply for paying the bills, there is usually a good option available. Home equity loans, personal loans, and business loans are just a few choices that can help you meet your needs. One thing that many people do not know is that the uses of personal loans are wide and flexible. While it is important to check the individual stipulations of the loan for which you plan to apply, many have very few exclusions. The amount you receive is also quite flexible, in that you can either apply for a small loan to get you by, or a more substantial loan for unexpected emergencies and expenses.
Plan as much as possible before launching your business
If you are still in the planning phase of your future self-employment endeavor, you are at a big advantage. Prior to leaving your 9-to-5 to pursue your passion, you can prepare financially for the transition. In addition to planning how much you need to make to stay afloat, as well as lining up a list of clients, you should also actively be saving for your transition to freelancing/business ownership. Currently, 70% of adults have less than $1,000 saved in the bank. While this may work out for those who receive a consistent paycheck each week or every two weeks, you will need much more saved as a new freelancer. Although recommendations vary, you should plan to have at least several months of income in your bank account. This means if you need to earn $1,500 every two weeks, you should plan to have about $9,000 to $10,000 saved in the bank before you begin freelancing.
Request to have select payment due dates changed on your bills
Once you transition from traditional employment to self-employment, you may find that the billing due dates that once worked well no longer sync up with your pay schedule. If you find yourself in a new pay schedule that would be more manageable with different due dates, many companies allow you to request a change of due dates for your payments. Loan companies, credit card companies, cable TV providers, and cell phone providers now commonly let you change your due date in your account on your own, or by filling our a brief request form.
Using one or more of the above strategies can help you navigate the sometimes unpredictable financial situations of self-employment. When it comes to staying financially stable as a freelancer/entrepreneur, planning is always key in everything you do.