So you’re a freelancer eh? Great! This means that you’ve quit the 9-5 rat race and have now become your own boss. Braving the world by taking on all the aspects of a business and consolidating it all into one working unit. What a time to be alive!
My experience of being a freelancer is mixed with a 9-5 job; this is a more common path that Sri Lankans take. This means having the security of a 9-5 job, plus getting clients and freelancing on the side to make some extra cash. But this wasn’t always the case for me: For a brief period of time, I worked for a startup that couldn’t pay me and my colleagues on time (they still haven’t), and this dragged on for many months until ultimately, I gave up on it. The only thing that kept me afloat was the money that I made on the side by freelancing my website development skills. While going through this time, I learned how difficult it could be to not have a paycheck on time, not have clients, and to not be able to manage the money you already have.
In this article, I am going to explore some freelancing tips, so that you can fast track your way to becoming a successful freelancer. If you stumbled upon this article and you aren’t a freelancer, read on, because I believe there’s something important you can take away from it.
The benefits of taking on freelancing are endless. No corporate bureaucracy, no vacation requests needed, no such thing as sick leave, annual leave, casual leave or whatever other leaves are available. You can be anywhere in the world and work for your clients.
Being a freelancer entails a certain kind of responsibility, however. You can’t just take on work and not deliver the work you set out to do for them. But you do get to decide what you do for them and why you’re doing it. This puts you in charge of your life and you can navigate it the way you see fit.
As a freelancer, you’re earning what you’re selling and in a lot of cases, you do not have the same monthly paycheck. Another reason why freelancing is so appealing is that there are no limitations to how much you can earn. You could possibly earn five to ten times more than your salaried peers. But, understand that you could also be earning less depending on how you manage your work.
When you work for a paycheck each month, your work levels could differentiate from month to month, meaning you could do more or less work and nobody would care, and it wouldn’t be reflected in your pay. It would be difficult to raise your personal standards in a system like this. When you earn what you deserve, you have the motivation to be effective. Your income is directly reflected by the amount of work you put in. In hindsight it makes you wonder why corporates don’t adopt new methodologies to increase efficiency.
Manage your money before your money manages you
Build your freelance career as if it is was a business. You need to know where your money goes and what income sources you have; kind of like a balance sheet. You might say it’s boring, but in my eyes, it feels like a necessity. Knowing your income sources means managing your workflow, schedule, and maybe other people you might have to collaborate with. It’s also the difference between making 1500 rupees an hour and 5000 rupees an hour. Since you aren’t a salaried employee, you should have a system in place to manage your resources.
As I mentioned before, how much you make depends solely on you. Tracking and managing your resources becomes a necessity. Once you’ve got that down, you can think about making a huge income. If you really think about it, if you aren’t good at making good decisions with a small amount of money, how good will you be with a large amount?
“How can I put a System together, Shavin?” I am glad you asked. My system is currently twofold. I already wrote about this in a separate article, but I didn’t go into the gritty details.
I maintain a spreadsheet.
This is obviously some sample data but you get the idea. It’s a very simple Google Spreadsheet with the same functionality as Microsoft Excel that you probably learned in your Grade 5 computing class. I maintain one spreadsheet file for the entire year and I create a new one before a new month. You’re most likely going to get an idea about the expenses you might have coming up (like bills, trips or even recurring expenses). List them as well, so you know where your money goes.
For your ongoing expenses (like breakfast every day), you can use an app like Monefy, to keep track of your ongoing expenses. Get to the end of this article and I’ll show you how to get my exact template.
Maintaining your spreadsheet is system 1, and using Monefy to track your ongoing expenses is system 2. Both of them together make up the finance department of your business!
“How will this benefit me?”
For me, the benefits seem endless. I get very excited by the numbers, even if its an expense. When it comes down to paying it never feels like a headache. You know why? Because you planned for it, of course!
When it comes down to clients, you can see how much you’re charging each client and you get a perception of the time it takes to do the project. If the project drags on then it probably won’t make sense to have them on. The opportunity cost is too much and you could be earning more with a different client.
One particular time that my system came in handy was when I had to buy a second-hand camera which I was trying to scope out for almost a year. I was saving up little by little for a camera that I wanted to buy. When the rupee took a hit against the dollar, it didn’t make sense to buy a brand new one as the cost of it didn’t really reflect the value, so I decided to buy a used one instead. It took one missed opportunity and lot of time to find one. I didn’t have enough money saved by the time I had found one but I used my system to move money around to make the purchase. Suddenly I had this flexibility to get the things that I really wanted. Chances are, this system could work for you and if you adapt it to your needs it could work better.
The single most important thing you can do as a freelancer.
Invest. Hear me out, I can tell you about how to invest in the traditional sense but I’ve already talked about it (read it after this) in this article. There’s another way to look at it and it doesn’t get talked about enough. On April 18th, 2018, my girlfriend had gotten me this book that I wanted to read. At this time I wasn’t a massive reader per se and I was exiting the job that wasn’t paying me. Buying it didn’t make sense to me as I had no money, so she got it for me for my birthday.
The book was called Rich Dad Poor Dad by Robert Kiyosaki. If you do some research, the things he talks about are criticized heavily in the personal finance community. But not a lot of books out there can cause a paradigm shift in a person’s mind. This was what it was like for me when I read it. He talks about how to make your money work for you instead of working for money and investing in real estate. I took this advice to heart.
Something subtle that I recently took away from the book was that you can make better investments if you can INFLUENCE the investment to make sure it goes in the right direction. Let’s take a hypothetical scenario, you buy 100 shares of John Keells stocks and then you sit there, it goes down and you have no say over it. Whereas someone inside John Keells could sit on the board and make sure the company goes in the right direction, making it more appealing to investors and thereby appreciating the price of the stock. You, on the other hand, have no influence over what happens at John Keells.
The real takeaway is that he says that the best way to influence your investments is to start a business. You really own it, you really control it and that’s going to end up being your best investment. And that’s the key! As a freelancer, you are the business. Therefore this means that you have to invest in yourself. Over the last year, I have invested heavily in myself in the form of books and online tutorials and the results are massive. It isn’t tangible as seeing the stock price appreciate, but it is tangible in the form of return that you get from providing a valuable service to your clients.
But I wanted actionable advice on investing!
You’re right. I should tell you about this too. Another rule about investing is to never put all your eggs in one basket, even if that basket is you. So here’s another tip that worked out for me.
Given that your main focus is your freelance career and business, my main piece of advice for you is to passively invest. Set a goal in mind, for example, say you want to build a fund that’s worth 500,000 rupees in 9 months or less.
That’s a big mountain to climb, right? What are the steps to accomplish this goal? Let me tell you:
- Find an investment vehicle. Let’s pick a fixed deposit with an interest rate at 12.5% and you set the term to one month (by setting the term to one month, you can add more money in the next month giving you more return on interest). Done.
- How much money will you need to put away each month, let’s do the math 500,000 rupees / 9 months = 55,555 rupees. I didn’t plan for that number to come, I swear. Alright, that’s done too.
- Now if you have a system setup (such as my spreadsheet) with all your clients and income sources, out of each income source how much would you have to contribute to get to 55,555 rupees a month to put into your fixed deposit? If you have 5 clients that’s 11,111 rupees from each client. If you can’t take it out from one client, then move more money from another (your system should help you with this).
- Great! Now, this is the most important step: When your client pays you, you block 11,111 rupees out of it before you spend it on anything else and put it directly in a savings account that’s ready to transfer to your fixed deposit when the time is right. By that, I mean when you’ve aggregated all of 55,555 rupees for that month.
- Transfer the money into your fixed deposit and feel extremely good about what you’ve accomplished for that month!
- Repeat step 4 continuously until you’ve hit your half a million rupee goal!
A problem that you will run into is when clients don’t pay you on time and it messes up your planning. This happens, it’s okay. What I usually do when this happens is that I still stick to my goal for the amount I want to put away this month, and somehow stretch it out till the next. The benefits of this are that it forces you to be frugal, and when those clients finally pay then you don’t have to be anymore. It’s up to you.
To sum up
If you looked closely at the image of the sample spreadsheet I listed books under investments and not an expense. As a freelancer, that’s the best way (in my opinion) to massively multiply your income. It doesn’t have to be about just books either: conferences in your freelance niche, online courses, the list goes on! It’s up to you. Coupling this information with a system that helps while also passively investing will give you incredible returns.
This is the other article I asked you to read after this one.
Also, show me some love in the comments section if you enjoyed this!
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