Freelancer: how to effectively control your personal finances

Workers with uncertain income must have medium and long-term planning to avoid complications in months of low demand

While freelance workers have a certain freedom to choose their working hours and location, on the other hand, their income is more uncertain compared to that of employees registered under the CLT.

Therefore, knowing how to control personal finances , while already important in anyone's life, becomes even more essential for self-employed workers. In addition to planning expenses in advance and creating emergency reserves, it is recommended to avoid long-term installments. 

In this article, we list five tips for organizing your finances as a freelancer and preventing uncertain payment dates from compromising your essential expenses.

Have a budget

The first thing to consider is that you should have a fixed budget every month: sum up basic expenses like rent, water, electricity, telephone, internet, and food, and try to save something that will last three to six months at least; the more, the better.

Suppose, for instance, that all these expenses add up to R$2,000. Ideally, you should have, in your emergency fund, between R$6,000 and R$12,000. In this way, you will be able to go three or six months without receiving any money and not be in arrears with your bills. Save as much as you can until you reach these amounts; do not worry about all the money at one time.

Write down all income and expenses

Efficient financial control will let you know how much and how much you spend. Annotate in a spreadsheet all your expenses and income, leaving out not even one cent. Having absolute control of what you are spending will let you know which items you are spending the most on.

It is common after one starts listing their expenditure that they become aware of just how much they spend in everyday essentials, items that cost little but build up to a considerable amount. Set limits for each category and, if necessary, wait until the following month to buy it outright.

Avoid making purchases in installments

Since your payment dates are not fixed, and the amounts billed month to month are uncertain, making medium and long-term installments can be risky, especially when it comes to accounts with high interest rates for late payments. This is the case with credit cards and overdrafts, for example.

The recommendation is to be cautious. Unless the item in question is absolutely necessary, save up your money and buy it outright whenever possible. By choosing this method, you can still negotiate a good discount, which will help you save more in the end.

Apply the 50-35-15 rule

Regardless of the amount that is received monthly, your lifestyle needs to adjust to the financial reality. Experts recommend what is called the 50-35-15 method to divide the amount received each month. The suggestion happens in the following form:

• 50% of the salary must be for fixed expenses;
• 35% of the salary should be for variable expenses and leisure;
• 15% of your salary should be saved for the long term.

Don't think about values, but percentages. Then, if there is any kind of accident happening to a person receiving R$3,000 and another one that is receiving R$10,000, the result in terms of living standards will be different, but both will be able to maintain a similar quality of life with savings in three or four months.

Don't put all your eggs in one basket

Since there is no employment relationship between freelancers and companies, and often there is no contract with a defined term, putting all your eggs in one basket can mean losing all your income overnight if you lose your services. Therefore, diversifying is a valid piece of advice in this regard.

Ideally, your income shouldn't depend on just one job. Because if you lose one, the others will be able to keep you healthy a little longer. Seek diversification and serve as many clients as you can. That way, crises will fall on your income with less impact.