Veteran freelancers share tips on managing finances like a pro
There is a certain amount of glamor about freelance / independent work. As a freelancer, you are your own boss, you have a cozy corner at home to work in, you can take off in the middle of the week and of course you also earn a great salary package.
As someone who has worked independently for the last 13 of my 20 year career, I often describe freelancers as being professional in their field, assisted by your own marketing manager, negotiator, financial planner, tech specialist, and muscle man for those clients who need some chase the payday.
Especially during these times, the idea of going freelance may seem appealing, or even the need of the day. Knowing how to make your job financially viable is important and we have experienced freelancers from a variety of backgrounds sharing their thoughts on important aspects of financial planning.
One of the key parts of freelancing is negotiating the value of your work and making sure you don’t miss out. Of course, much of this negotiating knowledge comes from experience, but there are a few tips to keep in mind.
Image: Courtesy Shivya Nath / Instagram
Shivya Nath, travel writer, bestselling author, environmentalist and social entrepreneur, quit a full-time job in 2011 to seek independence. She has two basic rules for negotiating terms – the first is a 50 percent upfront payment, which also acts as a killing fee. “The second is a willingness to move away from tasks that don’t seem to appreciate my work by trying to significantly undercut my prices. Besides, I don’t give myself a salary at the end of the month. Instead, I see late payments as forced savings, ”she says.
Some other tips freelancers follow on this aspect are never to do unpaid work for brands, and get complete clarity about the services and payment terms to be provided right from the start. It is important that all communication is always recorded via email or through a verified contract. Of course, there can be give and take when discounts are offered depending on the volume of business, but these are solely based on the choice of the freelancer. Inquiries about new customers and their track record are also a habit during the negotiation phase.
Make money doing freelance work
Image: Courtesy of Kalyan Karmakar / Instagram
Freelancers agree that you cannot give yourself a salary at the end of the month. Given that every business has their own billing logs and time frames for approving payments, payments aren’t as regular as a salary. It is precisely for this reason that Kalyan Karmakar, a food writer and branding advisor since 2012, does not set his financial goals on a monthly basis. “I conducted an analysis of my savings, expenses, and career goals with my financial advisor, and set annual goals based on which my savings were divided into fixed and liquid investments. And the attempt is not to cross the threshold, ”he explains.
Image: Courtesy of Ritcha Verma / Instagram
To ensure timely payments, Ritcha Verma, The marketing consultant, blogger and independent professional for the past seven years adds that she makes sure that all invoices she sends to her clients are in order and include supporting documents. “I make sure the customer confirms receipt so there is no delay or confusion. And I always keep track of the billing logs of every company I work with, and if the payment is delayed, I keep track of them, ”she adds.
Saving enough for lean months
For freelancers, no two months are the same. There will be fluctuations in the volume of work, incoming payments, contracts end without renewal, customers could choose to take a break. Hence, it is important to plan your finances for the lean months.
Image: Courtesy Natasha Noel
Natasha Noel, yogini, social media influencer, stereotype breaker and in her words an uplifting man, teaches yoga – through classes or workshops and now online due to the ongoing pandemic restrictions. “Whatever I earn, I save 30 percent of it at the end of each month. I have SIP and mutual funds that have helped me be more careful with money. So I’m picky about who I work with. You have to believe in the same ethics that I do. I am open to negotiation, but this is limited because I know my worth and stick to my weapons, ”she added.
The importance of diversification
Freelancers cannot stress the importance of diversification enough. Using your professional and acquired skills to find newer ways to grow your portfolio and therefore your income is key. As a corporate communications and media professional, blogger for lifestyle and parenting and a passionate fashion stylist, Ritcha was able to take on a variety of projects. “As a marketing consultant, I deal with brand consulting, social media marketing, PR consulting, events or everything in a single project. As a blogger / content creator, I create content of various types for different platforms. As a fashion stylist, I take on personal styling projects as well as TV shows. That diversification has helped me stay profitable, ”she says.
After a 15 year career in market research, Kalyan switched to independent food writing. He has written columns for top print and online media publications, published a book The Traveling Belly, worked as a brand endorser and now heads Finely Chopped Consulting, which provides consumer insight-based marketing solutions for brands in the F&B space. “My step into consulting in the third quarter of 2019 was my attempt to deepen my offering and go beyond the scope of the writing that would include strengthening and redefining my professional brand in the process. I recently focused on workshops to generate new revenue streams, ”he adds.
Image: Courtesy Shivya Nath / Instagram
Shivya is the author of a bestselling travel memoir The Shooting Star and one of India’s most widely read travel blogs of the same name. She has multiple sources of income from working with blogs and social media, royalties from her book, freelance writing, speaking engagements, responsible tourism advice, and digital marketing advice. Shivya recently co-founded Voices of Rural India – a curated digital platform for rural storytellers designed to create alternative livelihoods, improve digital storytelling skills in rural India, and enable people to explore India virtually.
By diversifying, the freelancer has several options to ensure that they can fall back on something when someone else is in a crisis.
Financial Pitfalls in Professional Life
The biggest threat to professional life is the lack of consistency in cash flow. You will have customers who don’t pay on time, you will have irregular hours, and the duty to be motivated to work every day rests on your shoulders. If you stay humble, grounded, and firm about your job expectations and give the job no less than 100 percent, you can do a consistent job.
As Shivya sums it up – the price of independent work is financial instability – but as long as that also feels like an adventure, it’s well worth the freedom that it brings!