The Freelancer’s Guide to Reducing Financial Stress
You want to start a freelance career, but you're worried about creating and maintaining a stable income while working from home. What if you can't find consistent work as a freelancer? What if you find work and it ends without warning? Financial stress is one of the most common sources of anxiety for a large percentage of Americans.
You're not alone. Transitioning from a traditional paycheck to a freelance income can be scary, but with a little forethought and planning, you can achieve financial stability as a freelancer and help keep your income stable all year long.
What is financial stress?
Money, finances, and budgets, oh my. We have financial stress in our personal lives and in our business lives. And if you are transitioning from a traditional paycheck to something a bit more inconsistent, it can add to the burden.
Financial stress exists when:
- we spend more than we make
- we don't have enough money in savings to feel secure in the event of an emergency
- our income is not stable or consistent
- we get paid less than we deserve
Ways to reduce financial stress as a freelancer
Sometimes finances can feel so overwhelming that the temptation is to pretend like they doesn't exist. But ignoring a problem is not going to produce a solution. Reducing your financial stress will take a bit of time, consideration, organization, and commitment. But you can master it by addressing a few key areas.
Track income and expenses
There are a lot of ways that working from home can save you money. But knowing exactly where you spend your money in ALL areas of your life will help you know how much money you need to earn to cover your bills.
- Track expenses for a few months and look at where your money goes and decide if those choices are helping or hurting your dream to work-from-home. Then make a budget and stick to it.
- Lower your expenses where possible. If you are working from home, consider hiring a local college student to help with childcare in the afternoons rather than using a pricey daycare facility or getting rid of an extra car.
- Save for slow times. If you can live on slightly below what you're earning, you can begin to build a cushion that will provide stability when work is slower.
- Track which months are best for you. Try to earn more in the busy months so you are covered for the months when work is scarce.
Plan for business expenses
Much of financial stress in our lives comes from unexpected expenses. But don't confuse emergencies like home damage with expenses you can plan for.
- Plan for taxes. As a freelancer, no one is handling your withholdings for you. And yes, you still need to pay your taxes! Every time you earn income, shift a percentage of that money into savings so you aren't hit with a bill you can't pay at tax time.
- Don't forget about vacations and sick time. There is no bank of PTO days when you are a freelancer. If you don't work, you don't get paid. But you need to be able to take time off for your physical and mental health. Be sure to plan these costs into the price of your services so you can time time off when needed and not be worried about lost income.
- Consider future investments in your business. Your computer won't last forever, and you'll want to take some classes to improve your skills. Be sure to allocate funds on a regular basis to reinvest in your freelance business.
Diversify your income
One of the benefits of working from home is that you don't have to get all of your income from one source. To ensure your stream of income won't dry up, it can be helpful to diversify your hours.
- If you write, try to find a variety of ways to do so. Start a blog for yourself, write web copy for others, and expand into social media captions. As you market your copywriting skills, you can also offer your keen eye for editing and proofreading.
- Are you the fastest tweet in the West? Consider helping businesses manage their social media. Companies need help with platforms such as Twitter, Facebook, Instagram and being able to work on more than one platform will give you more services to offer and reduce your financial stress points.
- Try diversifying your client base. From authors to podcasters, many types of businesses need transcriptionists. Consider working as an independent contractor for a company while also getting your own clients. Working with different types of clients not only gives you variety in your work, but also provides you the opportunity to keep making money if one area of the market slows down.
Marketing. Marketing. Marketing.
You're not going to make any money if no one knows about your business. Find as many ways as possible to get the word out about your services. There is someone out there — maybe even someone you already know — in need of your skills. The key is to help them find you!
- Create a business website or Facebook page, and share it on social media. Your connections could lead to the right client seeing you.
- Tell your friends and family about your business. Never underestimate word-of-mouth and personal recommendations.
- Reach out to organizations you want to work with. Look at groups that you're part of or whose mission you like and tell them how your services could help.
Secure Ongoing Income
Establishing ongoing income will ensure that you have a constant stream of money coming in even when there are no new work leads. It's income you can rely on to be consistent when other projects might fluctuate or end.
- Find retainer clients who will pay you a monthly fee for services such as posting to a blog, writing a newsletter, or transcribing their podcasts.
- Build a membership site which requires a monthly fee for access.
- Create a 12-month course where students pay you each month for new material. Once you have created the course, you can enjoy the ongoing income without the ongoing work.
Whatever type of freelance work you decide to do, finding ways to stabilize your annual income will lower your financial stress and take the guesswork out of paying your bills. By planning ahead, you will not only survive the ups and downs of fluctuating income but will eventually thrive all year long.
A transcription career is a great way to earn income and diversify your freelance offerings. Try our FREE email course to see if transcription training is right for you.
EXPLORE A CAREER IN TRANSCRIPTION WITH OUR FREE WORKSHOP