Financial Tips for Freelance Writers/Editors
Reading Jessica Monday’s article “Tax Tips for Writers” made me realize how unwisely I managed my freelance income in recent years.
If you keep a full-time job like I do, freelance projects bring in extra, nontaxable income (well, in the Philippines, that is). The extra money coming in can be overwhelming, and yes, sometimes you find yourself spending on unnecessary things, thinking that your bank account won’t dry up. The bad news is, it does–especially if there’s no extra money pouring into it.
So how do you work out your finances, especially if you’re maintaining multiple jobs? Here are a few things you can do to make financial management easier.
- Keep your freelance income separate from your savings account or your payroll account from your full-time work. Separating income sources will make financial management easier. Your full-time job should pay for everything (well, in my case, this is what I try to achieve)–the freelance earnings should be set aside for something else.
- Deduct your operational expenses from your freelance earnings. What are these? Telephone and Internet bills are one. If your freelance work involves client meetings outside of the home, your transportation and food expenses should also be deducted from your freelance income. The same goes for courier and handling fees (when you need to ship contracts abroad) and even business cards. For freelancers who maintain memberships with freelance sites, membership dues should also be deducted from the money you make as a freelancer.
- Gadgets and computer accessories like headsets, flash drives, and mouse pads–basically anything that you need for your freelance work–should be paid for with your freelance earnings.
- Record, record, record everything. I honestly had no idea how much I earned from my freelance projects until I sat down today and plotted everything in an Excel file. The bad thing is, because I never cared enough to record everything, I don’t know where all the money went (I can assume the bulk of it went to my child’s education).