by Raine Parker
Freelance writers are, like many other contracting specialists, in a unique financial situation due to the nature of their job. Our income isn’t yearly and it can fluctuate dramatically. Because of this, we have to be especially vigilant when it comes to handling our finances. Unfortunately, many of us writer-types, including me, aren’t very good at that aspect of the business, so it’s extra hard for us to take care of our money. Here are a few tips that might be useful for freelance writers who need some ideas regarding their financial situations.
You don’t have to completely understand the tax codes, but definitely make sure that you understand how exactly you need to report your earnings each year. Because freelancing is different, in that you won’t, for example, have a W-2, you should consider contacting the IRS to get more information about how exactly you can file your return.
Keep Track of Your Records
If you don’t use an invoicing system, you should immediately get one started. Invoices are the best way to track the work you’ve done and the income you’ve made from each job. You can create itemized invoices that will also help you figure out and adjust your rates according to how you handled jobs previously.
Create an Emergency Fund
Because you can’t always count on a steady income from your freelance writing, it’s important that you have some funds reserved for the occasional dry spell or emergency that you encounter. This fund could really save you in a bind from getting in extreme debt or some other serious trouble. Take a small portion from your earnings and put it towards this fund.
Manage Your Spending
This is an important rule: do not spend against an account that has not been settled. You never know if a client is going to fail to pay you on time or at all. Don’t ever assume you will get paid for a job, and definitely don’t spend money you don’t already have. Practice restraint when you make your budget, and be frugal in your spending habits, especially if your recent jobs have earned you less than you had hoped.
Don’t Over Promise
In other words, know your limits as a writer. If you can’t make the deadline, then don’t accept the job. If the subject matter is out of your league, don’t try to fake it. This may sound obvious, but what you wouldn’t realize is that making these sorts of bids can take you away from other more valuable jobs, jobs that will be a more effective use of your time. Bid on the jobs you know you can do well, so that way you balance your time commitment to the income.
Image from http://www.sxc.hu