I am terrible when it comes to money. My parents are great. They save, they plan ahead, they live within their means… Not to mention both of them are CPAs. In the past I have made little to no effort at these things, but I do take them into consideration more and more as I get older.
When it comes to my spending habits I’m very aware of the areas I need to cut back on: meals out, Starbucks coffee or that extra pair of shoes. And while being aware has helped me take steps (fancy steps, I might add, thanks to my shoes) to get better, I still have that urge to be instantly gratified when it comes to spending money.
As a freelancer you definitely need to be more mindful of your spending, especially when tax season rolls around (contain your joy). This is one financial place I feel I have a handle on and I can be grateful to my parents for that. They helped me lay a good foundation that makes tax season less painful.
Here are some tips that guide me through this difficult time:
- Save 20% of every pay check
From the very beginning, I have always had a separate business savings account where I put a percentage of every check I get. I have made it a habit not to touch that money, so I know not to take anything out. I pretend it doesn’t exist. This makes everything so much less stressful when I pay taxes four times a year because I already have the money there. This way you don’t have to scrounge around for the money.
- Start some kind of retirement fund
I know in your twenties it feels like retiring is so far off. However, I find great comfort knowing that I put away some money each month. Even if you feel like you can’t put away a ton of money, it definitely adds up. Something is better than nothing and it will give you a piece of mind.
- Keep up to date on your spreadsheets
My book keeping skills leave much to be desire. I have one excel sheet where I record all my business expenses and one where I record my income. I have definitely gotten better at doing this. Every month or two I sit down and fill out my spreadsheet, this makes tax season significantly less stressful. I used to put it off till it was absolutely necessary and then do my spreadsheets for the whole year. This took forever.
- Find an invoicing system
One of the best (and most simple things) I have done for my business is get a subscription to Freshbooks. I track all my time and send all my invoices through their system. It has been LIFE CHANGING. Before, I would have a million random Excel sheets where I would record the time. I would send my clients the different Excel sheets, but I never kept them in one place. It was a mess and looked unprofessional. Freshbooks has been life changing because I keep everything in one place and I can pull reports to see exactly how much I am making.
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