The gig economy takes up around 12% of the labor market and is growing. Freelancers have a unique set of financial challenges that include multiple clients, irregular income, and fluctuating expenses. Unfortunately, many of them are unable to maintain financial stability and pay bills on time. Others are unable to plan their financial future.
Technology may offer solutions around these unique problems. It can streamline cash flow management, provide actionable insights, and automate tedious tasks. Read on to see what platforms, apps, and devices can help you manage your freelance income.
How Does Technology Help?
Technology streamlines financial management in that it simplifies budgeting, controls spending, and helps with cash flow forecasting. Here are a few ways it achieves this.
Track Your Income and Expenses
If you are getting payments from different sources, you can use tools that consolidate them and categorize spending for clarity and easy planning. This ensures that you are in control of the cash flow and spending.
Categorizing spending allows you to separate the essential expenses from entertainment and luxuries. If you love casino gaming and other forms of entertainment, the expenses would be set on entertainment. You can then plan how much to spend on gaming and even learn the rules when playing blackjack on Blackjack.Guide to get some earnings.
Forecast Cash Flow
You can use tools to predict your income based on the number of recurring clients and pipelines bringing in some cash. You can then adjust your expenditure to match the projected income.
Automate Savings
Saving is usually a hot topic for freelancers, and many are unable to put some cash aside for emergencies, taxes, and investments. However, they can use tools to separate funds as soon as they hit their accounts and help them grow their wealth.
Simplifying the Invoicing Process
A correct invoicing process helps ensure timely payments from clients by ensuring that they are invoiced on time and correctly.
Providing Insights
Offers analytics to identify profitable projects and reduce unnecessary expenses.
What Technologies Do You Use?
There are various technologies out there that you can use to simplify your cash management. The choice of any technology depends on the size and specifics of your freelance business.
Mobile Banking Apps
Most banking apps come with features that help freelancers plan their cash. You can use them to monitor your account balances, set up alerts in case you receive cash, or your balances go below a given point, and transfer funds. Use one from your bank to track your cash flow on the go.
Payment Platforms
You can use tools like PayPal, Stripe, or Square to accept payments quickly, issue invoices, and track incoming funds. Many integrate with accounting apps for cash flow tracking. The choice of methods to use normally depends on what your clients are comfortable transacting with.
Other tools like Venmo or Apple Pay simplify splitting project costs or paying subcontractors, with transaction histories for easy record-keeping. You may also use your local mobile wallets to complete such tasks.
Budgeting and Cash Flow Apps
If you have cash flow from different sources, consider having a tool that combines them into one dashboard for easy tracking and budgeting. Good choices include YNAB (You Need a Budget), FreshBooks, and MoneyPatrol. They help you track income and expenses, forecast cash flow, and categorize expenses.
Automated Saving Tools
Automating saving reduces the chances you may divert your cash to other unplanned expenses. There are great apps like Qapital or Digit that analyze cash flow and automatically transfer small amounts to savings or tax accounts. Given that your income may be irregular at times, these tools can be a lifesaver.
Tax Management Software
You need to pay your taxes on time to avoid penalties and reduce the risk of cash flow disruptions during the tax season. Tools like QuickBooks Self-Employed and TaxAct estimate your quarterly taxes, track all deductible expenses, and generate reports. You can then use the information to file your taxes efficiently.
As a freelancer, you may have two or three tools in place to manage your cash. For example, you may have a budgeting app, a tax app, and a payment wallet to cater to all facets of money management.
A Few Points to Note
Prudent financial management is important, even as you use technology. The above tools will just enhance your capacity to manage what you earn. Consider the following to keep control of your finances:
- Always separate your business accounts from personal funds so that you don’t use the cash in either account for the expenses of another.
- Remind your clients about their payments on time to avoid cash flow issues. If you have long-term projects, create milestones within which you get paid.
- Allocate up to 25% of income to tax savings so that you are always ahead of your tax obligations.
- Review your monthly cash flow and expenses and make adjustments when you feel you may be deviating from your goals.
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