Managing Your Freelance Finances Through Difficult Times

As a freelance web designer, you understand how monthly income may vary from month to month. There are months when you have more than enough work, and then other months, the stream of work seems to slow to a trickle. This makes it difficult for many freelancers to manage their finances—planning ahead is challenging when income is unpredictable.

If you find yourself in the midst of a financial crunch, when work has slowed or is non-existent, it’s easy to panic. However, panic won’t solve your money issues. Instead, focus on solving the problem and getting through the crisis. This is easier said than done, but panicking won’t help your situation. In fact, panicking could keep you from moving ahead and finding solutions to get you through.

Using these methods will put you more in control of what’s happening. You’ll walk through each step assessing your business and your finances. These steps will help you work through the problem and to find solutions you may not otherwise consider or see. Remember, a proactive stance will help you feel more in control of the situation, rather than sitting back and wondering how to manage it all.

Let’s get started!

Step 1: Contact Clients

This may seem like a counter intuitive place to start working through a financial difficulty. However, it’s actually the best way to check the health of your business. And it keeps you from panicking over money.

The first thing you need to do is contact your clients via email. Let them know your situation and if anything will affect your ability to work with them.

This applies for any type of emergency, such as a global pandemic, natural disasters, business & personal financial issues. If there is some local or global emergency, be sure to contact your clients via email. You can wish them well, as this shows you care about their wellbeing. Then, in a professional manner, let them know you’re still able to work with them.

Staying in touch with clients is an important way to keep those relationships going through the emergency. Doing this also helps you judge how much work/income may be coming in (or not). Plus, your clients won’t be left wondering if you’re still available to work with them or not. You’re helping your clients and yourself through the crisis. In fact, you may even be able to help a client with some issue they’re having—you never know.

Step 2: How Much Cash Do You Have?

You’ve probably heard this before, but financial experts recommend that freelance web designers set aside funds for an emergency. Some experts recommend setting aside three month’s of expenses (which may include rent, groceries and other needs). Others say it’s best to have $1,000 to help you through a crisis or to meet unexpected bills.

However, if you’ve not been able to set aside savings yet, then you’ll have to check to see what assets and cash you can access during these difficult times.

a). Do you have money in checking or savings account you can easily access? If so, then how much? You can create an Excel spreadsheet and then list any funds you have access to.

b). How much food is already in your home? Is it enough to last several days without having to buy additional groceries? Here, again, a list can be helpful. You won’t have to keep it all in your mind. Plus having a list will show you what you have, as well as what you may need.

c). Do you have any unused gift cards, credit card points, coupons or vouchers that can help save money or possibly pay for expenses? Here, it’s necessary to get creative. You may find that even frequent flier miles, free hotel stays and more can help to get you through. Make a list of everything you find, then review the list of see if any of these can help your financial situation.

During this time, it’s best to avoid using your credit card, take money from retirement funds or even take money from investments. And avoid a obtaining a loan, if possible. Once the crisis is over, you’ll have to replenish these funds and/or pay back credit card debt or loans. That can be expensive, and you don’t want to have high expenses once the emergency is over. This can make recovery of both personal and business finances even more challenging when things get back to normal.

One more note—be sure to look at upcoming due dates on invoices. Will you be able to make these? If not, then be sure to let your clients know and see if they’re willing to work out an extension for the project deadline. Also check to see potential income from your current projects, their payment due dates. This income could be overlooked when reviewing your finances.

After these assessments, if you feel your financial situation is not positive, then don’t panic. Read on for additional tips that can help you manage this financial emergency. 

Step 3: Immediately Cut All Unnecessary Spending

This is imperative. If your income is going to take a hit, then you’ll need to immediately cut back on all personal and business spending that is unnecessary.

For your business: cut back on expenses, and check to see if you can downgrade some services. This may apply to WiFi, web hosting, and more. Once things are back to normal, then you can upgrade them again.

It may be helpful to make a list of your business expenses, and then prioritize those that you need to keep the business going, and those that you can do without.

When it comes to your personal spending, you’ll need to make some serious cuts. Again, it can help to make a list of your expenses, then prioritize those that can be reduced or cut. Some areas to review:

  • Gym memberships: working out at home will save quite a bit of money.
  • Nights out on the town: you’ll have to put these on hold until times are better.
  • Wants vs. needs: sometimes we make emotional purchases or think be deserve a treat. In a time of financial crisis, you simply can’t afford to make these types of purchases. So only buy those items you need and nothing else.
  • Purchasing brand name products: instead, opt for buying the equivalent generic product. They’re usually of the same quality as the name brand and you’ll save a lot of money.
  • Dining out or ordering takeaway: instead, choose to cook at home. Cooking from scratch is another great way to save money.
  • Paying for cable TV services: instead, opt for streaming services, which are usually quite a bit cheaper. You can access many movies, TV shows, sports and more through the streaming services.
  • Using a coworking space: instead, work from home, which will save you quite a bit of money.

If at all possible, make sure to keep your health insurance. This is imperative.

After reviewing and cutting both business and personal expenses, you’ll have a better idea of what your budget will be.

Step 4: Negotiate Bills with Lenders

During times of financial difficulty, lenders may be able to help you. Lenders such as loan providers, credit card companies, and more may be willing to make a deal to lower your monthly payments until your financial situation improves.

If they’re not able to offer lower payments, they may be able to lower your interest rates, which will keep the interest from becoming a bigger problem you’ll have to face down the line.

And don’t forget that you can also opt to pay the minimum each month. While that’s not the best way to manage debt, it can be a short-term solution when finances are tight.

5). Consider Other Ways to Increase Income

It can be helpful to look for additional ways to earn money on the side as you work through a crisis. For instance, you may be able to gain new clients by contacting businesses outside your normal niche.

Another idea is to become a tutor by offering coding or web design courses. You may also consider becoming a virtual assistant to help businesses with cloud-based business tasks.

Summing It Up

When you’re going through a difficult time, it can be scary; however, avoid panicking. Instead, focus your energy in a positive direction by figuring out your finances and then come up with a plan to get you through until things get back to normal.

Managing Your Freelance Finances Through Difficult Times ultima modifica: 2020-05-10T14:49:08+00:00 da Liam Pedley

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