It’s an adventurous decision to live your life solely from the provisions of your art. The trouble is that the income is not always steady, you have no 401k, and there’s no freelancer insurance commission offering an opt-in date.
Taking care of yourself and a family when you’re living on your art is totally doable. You just have to be thoughtful and intentional with the way you handle your money. Here are a few personal finance tips for freelance entrepreneurs.
Get health insurance coverage
When you work for yourself, there’s no company insurance to cover your healthcare needs. The life of an entrepreneur means that if you want something done, you’ve got to do it yourself.
If you live in the U.S., you don’t have the luxury of healthcare for all. In fact, it’s the law that you have an active health insurance policy. As a freelancer seeking health insurance, you won’t have a big company offering a chance to opt-in on their provisions. You do, however, still have tons of options for coverage.
Budget throughout the year for taxes
Freelancers don’t have an automatic deduction from their weekly pay for federal taxes. As a freelance professional, you have to make sure your taxes are paid. You may have an accountant to do the job, but it’s likely that you’re doing it all by yourself.
Take small pieces of your income, and set them aside for tax time at the beginning of the year. You can assume that at least 20 percent of your income will suffice the government.
Write up a clear budget
Budgeting is important for anyone, but being an entrepreneur makes budgeting even more vital for survival. Living by a strict budget will provide that rescue fund, should something go awry (and something always goes awry).
Make sure that savings is a part of your budgeting. You need some free funds set aside for personal recreation and entertainment.
Keep thorough records of everything
Keeping good records is important. You need to know where every dime of your money is going. You probably have some interest in just how much money is coming in as well. You’ll thank yourself for keeping such detailed records if the IRS ever chooses you for an audit.
Take time for self-care
The little part of your savings set aside for personal time needs to be put to use. Entrepreneurs tend to throw themselves into their work. Your work is likely the majority of your life, but you need to make time for something else in your world.
You need time for smiles, laughter, love, tears, and adventures. If you’re a planner, plan a yearly vacation for yourself.