Freelancing – Beat the Credit Crunch

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Nowadays with the problems we face with the economy around the World, it’s extremely important that we do as much as possible to fight and keep to par so that we can survive the financial crisis. These times are tough, especially for freelancers, so I decided to write this article to give a few tips to help fellow freelancers in this murky time. Hope you learn a thing or two; and enjoy…

Track Expenses

As a freelancer, you’re essentially a one-man business. Therefore it’s up to you to record and take track of your activity in the form of profits, revenue and expenses. If you don’t take a record of accurate expenses and track where your money is going it’s possible to lose large amounts, not being able to recall where or how that money was spent. Being clever with what you have is core to survival in tough times, so teach yourself how to be more cash-savvy and save where-ever possible.

Tracking expenses isn’t just so you know where your hard-earned cash is going, but ultimately it’s to make yourself more aware of your spending patterns, so you can reduce your expenses and become more efficient and therefore profit more in the long-run.

Invest in Gold/Silver

Yes, I know this isn’t an investor’s blog of any kind, but history shows that in a recession the average price of gold and silver increases tremendously. Gold is inevitably more popular than silver as taxes don’t apply to it in many countries, whilst with silver they do (for example, VAT applies to silver in the UK). You can’t guarantee that you’ll make lots on gold/silver, but its a solid form of investment which isn’t effected by changing currency values.

Financial Targets

Keeping monthly financial targets are brilliant for making sure you’ve got your head above water when it comes to money. First off, work out your absolute minimum income required to sustain a lifestyle slightly lower than your current for a month; take out all those frivolous luxuries such as your frequent visits to Starbucks (yes, do it). Once you have this value, divide it by 4, this is your weekly minimum income requrement. After that, multiply this value by 1.20 (this will add 20% on top of the value). You’ve now got your weekly financial target which you should record and keep in mind as you record your income over the weeks. If you’ve failed to make the target after a week, re-evaluate your expenses, and see if there’s anywhere you can save a bit more cash.

Example

Expenses:

• Mortgage: £1200
• Food + Drink: £300
• Insurance: £200
• Misc: £300

Sub-total: £2000

Divide by 4: £2000/4 = £500

Apply Multiple: £500 x 1.2 = £600.

Total: £600/week

In this particular case, I would need to earn £500 per week in order to sustain my lifestyle, and the recommended target is £600 to give yourself some protection when unexpected things come up. I don’t recommend really doing a ‘misc’ expense as this leads to being wasteful and not being able to track expenses properly.

If you manage to earn above your targetted amount, set aside that as savings. You’ll also need to keep taxes in mind when calculating expenses.

Don’t drink bottled water!

Ok a bit of a precise tip, but it’s true. Bottled water is infinitely more expensive and there’s hardly any regulatory action to ensure they’re even bottled at springs.

“At 0.22p a litre, tap water is 141 times cheaper than the bestselling mineral water, Evian, which, even if you buy it in a supermarket, costs 31p a litre.” – Which.co.uk

If you need to take water around with you, just fill up a bottle with tap water! You’ll save so much over time, and it requires no effort whatsoever.

There’s a bunch of other things you can do in order to make sure you’re in a good position when times get harder, I would recommend everyone follow at least one of these tips and see the results; I’m sure you won’t be dissapointed