For those looking for an alternative to the rat race, life as a freelancer can seem pretty sweet. When you work as a freelancer, you can set your own hours, choose your own clients and enjoy life on your own terms. That all sounds pretty good, and it may be why so many moms are ditching the office for a more flexible lifestyle.
Unfortunately, life as a freelancer comes with at least one serious downside – earnings instability. When you work a full-time job, you have a pretty good idea what you will be earning with every paycheck. When you work as a freelancer, you have no such guarantees, and that can make for some sleepless nights.
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Fortunately, there are some ways to smooth out the inevitable bumps of freelance income, so you can rest easier and actually enjoy what you do. Here are some tips to help you ride the earnings roller coaster and enjoy your new lifestyle.
Establish an Emergency Fund Before You Make the Leap
If you are working full-time but dreaming of a freelance career, why not enjoy the best of both worlds while you can? It is hard to give up the security of a steady paycheck for the uncertainty of self-employment, but you do not have to make the transition all at once.
Being employed full-time can give you the money you need to get your side venture off the ground and the ability to build an emergency fund you can use later on. You can use the spare time you do have to build your new business, land clients and test the waters. Once you are ready to make the leap, you will have savings you can rely on to see you through the inevitable lean months.
Bank Your Essential Expenses as Early as Possible
Whether you are enjoying a banner month or struggling to make ends meet as a freelancer, the bills still have to be paid. One way to smooth out the inevitable bumps in your income is to bank your biggest expenses as early in the year as possible.
When you have a great month, take that money and put it away to cover those essential expenses for the foreseeable future. You may need to scrimp a bit to make it work, but knowing you have enough money in the bank to cover your rent or mortgage, utilities and other big bills will give you real peace of mind.
Play the Averages
Once you have a year or two of freelancing under your belt, you can play the averages and set your spending pattern accordingly. Even if your income varies considerably from month to month, you can use your average earnings to establish a baseline.
When your earnings for the month come in above average, you can take that extra money and put it aside. When you run into a rough patch, you can draw on those savings to meet your expenses and get ready for better times ahead.
Living and working on your own terms can be pretty great, but it is important to be prepared both emotionally and financially. When you do your own thing, you are responsible for your earnings, paying the bills and the taxes you owe. Learning to ride out the bumps of freelance income can help you thrive financially and be more productive.