This is a guest post by Deborah Dera. If you want to guest post on this blog, check out the guidelines here.
Let’s be honest from the start, shall we? I’ve been freelancing for 5 years and have been working independently for the past 2 years. If I knew 2 years ago what I know now, I might have waited longer before quitting my full-time job to make it on my own. That said, I’m still alive and kicking and I’d like to share some of the mistakes I and others have made in the hopes that you’ll be able to launch your own freelance career without as much financial strain.
Ignoring Your Savings
One of the worst things you can do as you prepare to embark on your career as a freelancer is to ignore your savings. Most financial experts recommend always having a buffer of at least 6 months in savings in case of financial emergency. Having that kind of a financial safety-net before starting your freelance career might be niche but isn’t always possible. The truth, however, is that you should have some money in savings to help you cover your rent, utilities, and grocery bill while you search for new clients. Make sure you have a month or two in reserve and don’t forget to continue adding to your savings as you begin earning more.
Living Beyond Your Means
Let’s say you’re working a 9-5 job in corporate America. You’re probably used to buying a cup of hot coffee on your way to work in the morning and you might buy your lunch every day. When you first start freelancing you’ll need to be more careful about your expenses – every penny will count. That $5 cup of gourmet coffee, while nice, may add up to the amount of money you need to pay your electric bill. Your lifestyle will change as you grow your business, but it is important to recognize that you may not be as well off in the beginning as you hope to be.
Not Adjust Your Expenses
We often take our day-to-day expenses (or lack thereof) for granted. Your office job probably gave you access to long-distance telephone calls, fax machines, and copy machines – whether you should have been utilizing them for personal reasons or not. Now you’ll have to pay for these and other expenses on your own and they can quickly add up. Adjust your cell or home phone calling plan to include long distance, invest in an online faxing service, and look for some all-in-one office equipment (printer/copier). The more you can do in-house, the more you’ll save and have available to grow your business.
Not Tracking Your Expenses
As a freelancer, almost every single penny you spend will count as a tax deduction. Keep track of expenses – from office supplies to medical appointments – and organize your receipts accordingly. Your accountant will be able to help you determine what you can legally write-off when tax time rolls around – and you may just be surprised at how much you’re able to save.
For me, the hardest part about launching my freelance career was redefining my definition of trust. I was suddenly on my own and wanted to trust everyone who recommended a product or service that would make my business better. I subscribed to blog feeds, read countless newsletters, and subjected myself to “shiny new object syndrome.” I bought product after product, trusting their promoters and believing each would help me to grow. I would buy one thing and then purchase the next before I had finished with the first. This type of spending will eat into your profits and, if you aren’t careful, cause you to quickly build up a significant amount of debt.
As a freelancer you’ll want to gain control of your financial situation from the very beginning. Take your time and build your business slowly. Don’t waste your money on things you don’t need and make future investments wisely. Treading carefully, especially in today’s economy, will ensure you’re always able to put food on the table!
Deborah Dera is a full-time professional writer specializing in personal finance, credit repair, bad credit loans, bankruptcy, blogging, search engine optimization, and PLR content creation.