Clint Proctor, known in certain circles as a very successful freelancer, was once a novice too. Working for a salary, he had no idea that the life of a freelancer could be filled with stress. Reading about work from home, many people imagine getting up at any time of the day, easy tasks and huge incomes. Reality is not so rosy. Serious problems await the beginning freelancer. First of all, with finances.
Freelance Money Issues
The biggest problem is that income becomes unstable. Work in the office gives you the opportunity to chat with colleagues, drink tea, sit on social networks, go on sick leave. And then get a fixed amount.
The income of a freelancer, in contrast, depends on his active work. Will do more - will receive more. In addition, the number of orders may be unstable. Today it is two hours, including tea breaks, and tomorrow - the whole day with almost no rest. There are days of downtime when there are no orders at all.
In such a situation, it is impossible to predict future income. It is impossible to plan purchases, trips, whether it will be possible to postpone something. Because of this, beginner freelancers often start so stressed that they want one thing - to return to their regular jobs and get the same salary.
Clint Proctor believes that this stress can be eliminated if you follow three simple strategies.
3 strategies for financial management freelancers
The strategies that Clint Proctor proposes should be implemented in order. Thus, you need to take only 3 steps in order not to be in the financial hole.
- Define a lower income bar.
- Plan your budget.
- Come up with how to spend the leftovers.
Lower income bar
Freelancer income is unstable. Therefore, the first thing to determine is the line below which income should not fall. There are two ways to do this: focus on the average annual or lowest income.
That is, you can add up the amounts that have turned out recently, divide them by the number of months and focus on this figure. Many do just that. The disadvantage of this approach is that sometimes earnings will be lower than this figure. Sometimes much lower.
Therefore, Clint Proctor prefers a different approach: when planning, he starts from the least profitable month. He believes that it is much more effective. And he is trying to do everything to get at least this month. So Clint has a minimum goal, which in any case must be achieved. Everything that will be earned above is considered as a pleasant bonus.
Budget planning
After determining the amount that must be earned, you can plan spending. The most important thing is that the costs are less than the expected revenues. This may not be easy, at first you will have to limit yourself in something, but this approach eliminates possible debts and unnecessary worries.
According to Clint’s idea, in this step, expenses should fit in the amount that is received in the lowest-performing month. There is no need to think about possible surpluses yet.
Investing balances
The last step is the most enjoyable. If it came to him this month, then the amount has exceeded the lower limit. Now you can think about where to spend the "extra" money.
Clint offers three options: create a “safety cushion”, make a wish list or put in a bank at interest.
"Safety bag"
This is the most important direction where the remaining money should be invested. To determine the amount that you need to have as a "pillow", you can use this formula:
Lower income bar * 6 months.
It is believed that this is the best option. Although some consider the supply sufficient, which may last only three months. A stock of less than three months is not worth doing. In the event of a serious illness or downtime for other reasons, there may not be enough saved money.
After the "pillow" is formed, you can go to other directions.
Investment
You can invest in anything: on a bank account at interest, in real estate, and in any other type of investment. Clint Proctor prefers bank deposits.
A wish list
In the list you can write down what is usually not included in the budget and is not considered vital:
- repair in an apartment or house;
- purchase of new equipment;
- a trip to the sea;
- purchase of furniture;
- entertainment, such as concert tickets, an amusement park, and so on.
Each family can have its own wish list.
The results that these strategies give.
Those strategies that Clint Proctor recommends give incredible results:
- lack of debt;
- confidence in the future;
- the opportunity not only to make ordinary purchases, but also to create a stock, invest and delight yourself with what you would not be able to afford under normal conditions;
- a clear and achievable income goal;
- a nice bonus in the form of extra money almost every month.
Thus, using the strategies proposed by Clint Proctor, you can get rid of the main "headache" of any freelancer - income instability and uncertainty about the future. Over time, when there will be more experience, the lower bar of earnings will shift, it will be possible to revise the budget and save more significant amounts.
Definitely, everyone who wants to go into freelance forever should take advantage of these tips. Still, they were given not just by a freelance copywriter, but by the founder of WalletWiseGuy, a well-known blog for those who want to correctly manage their finances. Such a person can not be trusted.