Financial planning for freelancers is a topic I’m super passionate about, but don’t always have the opportunity to share, given the nature of my content categories. As a fashion and beauty content creator, the insides of my wardrobe and makeup closet are often shared, but the inner workings of my life, finances, and money management are kept pretty private–and honestly, I do prefer it that way.
That being said, I get a lot of questions about how I get paid as a freelance content creator, which is a super easy and simple question to answer (in fact, I’ll get into some of this below at #2). In today’s piece, I want to provide a little more value and actually share what I do with what I get paid as a freelancer. This way, I’ll be able to share some financial planning tips for freelancers out there like me! Before we dive right in, here are the two biggest things I want you to know:
- Understand what financial planning actually is:
If you’re a freelancer looking for financial planning tips, you must first understand what financial planning is not. It is not simply cutting back on spending or saving more for the heck of it. There has to be a certain amount of intention, and a decent understanding of what exactly you’re working towards.
Financial planning, then, is taking a full assessment of your current finances (inflows, outflows, debt, savings, and more) and creating a strategic plan to reach certain numeric-based financial goals. We’ll dive deeper into financial goals shortly, but for now, one way you can create more certainty that you’ll be able to achieve these goals is to…
- Diversify your income streams
I understand how difficult it is as a freelancer–you’re almost always worried about when and where your next check is coming from. Some months, I end up doing 5x more in brand deals, and other months I struggle to sign even one. The best decisions I’ve ever made were to try new opportunities that would help me earn money on my own terms, even if they paid out a bit less than I was used to seeing with brand deals. Speaking from past and current experience, here are some of my income streams: brand partnerships, affiliate sales, live streaming, stock trading, closet sales, content creation for social media apps, acting, modeling, photography and videography for brands, consulting, styling, and the list can go on. Of course, I don’t do all of these at any one given time. The point I want to make is that using your current skill set to expand the ways in which you can get paid is one of the most important lessons I’ve learned. With this, you’re able to lean into different arenas to reach your financial goals when your main source of income wavers.
Remember how earlier, I said I’d share what I do with what I get paid? Well, now we’re ready to dive right in.
- Create long-term financial goals
If you have a grand sum of what you want to be able to have in the bank account one day, that’s great! First, though, we have to do a few quick checks. If you’re in debt, I want you to learn more about how you can consolidate your debt. Otherwise, I want you to think of what you’d like to have in your bank account in 5 years. Write this number down. Now that you have a big picture goal, you’re able to break this number down into yearly goals, or even further, into monthly goals. Already feel like you have your work cut out for you this month? Don’t worry, instead of getting overwhelmed, I want you to…
- Find your favorite budgeting technique
There are a ton of different budgeting rules other’s will tell you to follow, but I want you to peruse this list to find your favorite budgeting technique–one that will suit you and both your personal and financial goals. If you follow me on any platform, you know my mission has always been to empower individuality. Each one of us is unique, and therefore the way we choose to budget should reflect our unique preferences in both a personal and financial sense.
- Separate personal and business expenses
Alright, in my case, the two are so intertwined that it’s sometimes hard to tell. Am I buying the new handbag for my content shoot or for my personal pleasure? I’m going to give it to you straight. Often, the answer is both, but I know that my business revolves around my appearance and what I wear, therefore I am usually able to categorize this as a business expense. That might not be the case for you, however, and I want you to start thinking: is where you just spent your money serving you as a person, or your business? Doing a check at the end of each month on your credit card and bank statements, and notating which expenses were for business versus personal, will even help you save time when tax season comes around. Speaking of, you should always…
- Keep extra aside for taxes
Truthfully, I’m still finding myself slightly shocked when tax season comes around, although much less than I once was. Understanding what tax bracket you are likely to fall into will help you decipher how much you’re going to have to keep aside just for tax purposes. This, of course, does not take into account other savings you should be thinking about. For the purposes of keeping this post succinct, I’m going to spare talking about saving for retirement, but just know that that is a very important financial topic you’ll need to be thinking about as well. Though, if you’re just starting out as a freelancer, I don’t want you to be hit with a shock when tax season comes around, so make sure you make an informed estimate of your tax bracket so you know how much to save.
What I love most about financial planning is that it creates structure which actually leaves room for creativity. Constructing a plan and preparing for success takes away anxiety, which can be crippling for a creative person. If you’re a freelancer outside of the creative field, you too, will benefit from the clarity and structure that comes with financial planning. I promise you, it’s not as daunting as it seems, and taking the first step is usually the hardest. Over time, you’ll get better and better at financial planning, and if you’ve gotten this far in the post then I’m sure you’ll have a decent amount of information to get started!