Find ways to smooth out the variable cash flows In many ways, the key to financial success as a freelancer is being able to smooth out your cash flows so that you have a regular amount available each month to meet all of your basic financial needs: rent, bills, and cost of living expenses (like food). The goal is to have regular, recurring cash flows with money hitting your bank account on a regular basis. For the freelance lifestyle, one way of smoothing out cash flows is by lining up regular clients that you can count on each month. In a best-case scenario, all of your regular clients will cover your basic financial needs, meaning that everything else you make each month is a bonus. Another tactic is to focus on long-term projects rather than a series of short-term, “one-off” projects that consume a lot of your time and attention.
Look for ways to cut your fixed overhead
As a freelancer, you need to think of your work as a business. And as every business knows, the biggest source of cash outflow each month is what is known as “fixed overhead.” In addition to rent, that also includes monthly bills and monthly subscriptions. These are payments that just won’t go away. So look for ways to ruthlessly cut all the little bills that add up, month after month. That means taking a close look at your cell phone plan, for example, and seeing if you can move down to a more affordable option. It could mean cutting the cord to cable TV and checking out one of the new, more affordable streaming TV options. And it means checking your insurance policies to see if there might be a way to pay less each month.
Pay down your credit cards
It’s tempting to put all your expenses on your credit cards, but the amount that you owe can rapidly balloon if you’re only making the minimum payment each month. So look for ways to chip away at your credit card debt. The more you can pay, the less you will owe each month as a result of those dreaded interest payments.
Cut back on your variable expenses
You might be spending way too much on food and entertainment each month, so look for ways to pare back your spending. For example, instead of a dinner and a movie during the weekend, think about staying in with a home-cooked meal and simply watching a movie with Netflix. Or, instead of ordering takeout whenever you’re short on time, think about ways of stocking your fridge and pantry with foods that can be easily turned into self-prepared meals. By taking these prudent financial moves, you’ll be able to stretch your money as a freelancer. The bonus here is that you’ll also remove some of the stress in your life, since you won’t be as worried about making ends meet every month.
About Lorra Brown:
Lorra Brown is the CEO of LBE Consulting, PLLC based in Grand Prairie, TX. Lorra is a multifaceted business strategist that works with a plethora of clients around the country. She provides accounting services and business consulting to a diverse bed of self employed professionals. Her life’s mission is to help women gain empowerment and change their mindset about their finances.
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