How Do Freelancers Deal with Cash Flow Fluctuations?

One of the ongoing challenges that freelance writers face is the difficulty of dealing with an inconsistent income. While freelancing can be a very rewarding profession, there are also a lot of variables to consider. The amount of work you have as a freelance writer may dip and surge from month to month, and not every client will pay you on time. Between reliable clients and unreliable ones, it can be tough to plan for the present, let alone the future.

One of the best strategies to adopt is to think of freelancing as a business, like any other. In other words, you need to meet your basic expenses before you can begin making a profit. If you’re looking to stabilize your freelancing career, then read on for some useful tips.

Set up a separate account for your business revenue.

If you want to avoid needless headaches during tax season, then it’s a good idea to set up separate checking and savings accounts for your freelancing career. After you’ve done this, you can have your clients pay your business account, and then transfer the money into your personal account. This will also make it easier for you to set aside some of your income each month to pay your taxes at the end of the year. It’s also smart to consult a professional accountant, so that you can be sure that you’re ready for tax time.

Calculate your minimum monthly income as a freelance writer.

How much money do you need to pay your basic expenses? That number should be the most basic variable you use to decide how much work you will need to find in a month. Once you have this number, you’ll be able to plan more effectively, and find extra work if you require it to meet your expenses. If you have annual costs—such as renting a workspace—then divide that number by 12 and include it in each month’s minimum income.

Decide what your monthly salary should be.

As a freelancer, you are your own boss—which means you decide how much you are paying yourself. Thus, you’ll need to decide on your income—that is, how much money you will transfer from your business account over to your personal account. It’s up to you to determine how much you want to add to your minimum expenses, but it should be an amount that you can reasonably expect to make every month. Then, make that transfer every “payday.” You can schedule this for once a month, once every two weeks, or even once a week, depending on your preferences.

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