5 TIPS FOR CALMLY MANAGING YOUR FINANCES AS A FREELANCER
Freelancing has many advantages: no relationship of subordination, freedom to work from where you want, to choose your projects or your clients, etc. In short, the micro-enterprise has everything to please (at first sight). But all this is only possible in the long term with good management of your finances, pro and personal , especially with irregular income.
No room for “we’ll see” regarding your turnover, your cash flow or your savings. The flouze in micro-enterprise is managed in the same way as in any company. Without further ado, we give you 5 tips for managing your freelance finances . Let’s go!
Separate your professional and personal finances to see more clearly
To have a business bank account or not to have a business bank account, that is the question in freelancing. Let’s make things clear: nothing forces you to open a pro account (not even the small lines at the foot of the contracts of traditional banks). Yes, a private bank account is more than enough to manage your micro-enterprise finances. Moreover, there are no small savings as the oldest would say. The latter becomes mandatory only when your turnover exceeds 10K€ for 2 years.
That said, you don’t have to wait to be Jeff Bezos to separate pro and personal finance in freelancing . We recommend that you open a bank account dedicated to your micro-enterprise from the start of your activity. This is the best way to gain clarity and not to get confused by confusing your social security contributions with your EDF bill. You can also get paid (by transfer to your personal account for example) while keeping control of your professional cash flow .
Monitor cash closely and anticipate movements
Precisely, let’s talk about the cash flow of a micro-enterprise. As a freelancer, you probably already know that there can be a significant crossover between money coming in and going out. Like all companies after all. Customer receipts, social contributions, VAT, tools, subscriptions, investments for your business, etc. In short, things are happening and it is better to keep an eye open.
Our advice: always stay one step ahead of your freelance cash flow . Anticipate everything that can be, and in particular via a provisional budget. If the word “forecast” in accounting gives you cold sweats, don’t panic! It is neither more nor less than a dashboard on which to note everything that will come in in the future (the signed quotes therefore) and everything that will go out (your professional expenses), and on what date. You will not only be able to anticipate whether or not you will achieve your short, medium or long-term financial goals . But also check that you are able to make certain purchases or investments if necessary.
Get an invoicing tool for micro-entrepreneurs
Despite a lighter legal status in terms of accounting, micro-entrepreneurs are not spared some thankless administrative tasks. Even if you love (perhaps) completing your invoicing and calculating your turnover to declare, it can quickly become a waste of time in your daily life. And we are not even talking about the micro-entrepreneurs who check their calculations 14,039 times when they declare to the URSSAF.
Let us then introduce you to the Holy Grail of auto-entrepreneurs: the invoicing tool . If you don’t use one yet, know that you are about to enter a fabulous world of speed of execution, serenity and… enjoy creating your invoices! A tool like Freebe will help you create compliant administrative documents in 3 clicks and track your cash flow in real time. Your dashboard will give you an overview of your finances , and promise: you’ll never have to get out the calculator again.
Saving regularly by being a freelancer: an essential
We are touching on a sensitive subject since we know it: building up savings is not always easy as a freelancer, especially at the start of your activity. However, it is essential to build up a safety mattress (even a small one) as soon as possible. No one knows what tomorrow will bring. Financial instability is also part of the game when working on your own. But beyond the potential loss of a client, you’ll also be going on leave from time to time and (spoiler alert) you won’t get paid while on vacation.
Therefore, try to always put a small amount aside each month , more or less depending on your income. Among the majority of auto-entrepreneurs, we are talking about a fixed percentage of the monthly turnover generated, in the same way as the part reserved for contributions or VAT. This reserve will allow you to cope in the event of a hard blow, to supplement a personal monthly income or to go on leave more serenely.
Invest and make your money work
Do you find it a shame to let your savings sleep in a corner of your A booklet? Investments are also great alternatives when you don’t need your money right away. No, you don’t need to be a millionaire to make a few investments with good returns , in the medium or long term. Contrary to popular belief, all budgets can be found there, including self-entrepreneurs with little or a lot of income.
Rental real estate, life insurance, PEA, stock market, investments, responsible investments, cryptocurrencies, etc. There are dozens of investments in which you can be interested according to your possibilities, your sensitivities or your projects. Either way, putting your money to work as a freelancer is never a bad idea. Your income fluctuates throughout your career and your future retirement will often be less advantageous than that of an employee.
In short, calmly developing your freelance activity also and above all requires good habits in your financial management. The invoicing tool then becomes essential to save time, but above all a good dose of peace of mind when your income is irregular. Finally, don’t forget to set fair and profitable prices to find your way around!