Being a freelancer means giving up a lot of immediate wants to keep your business afloat and growing. Things like:
a new wardrobe every season,
social events that involve eating out or meeting at a bar, or
a more desirable living situation (and let’s face it, choosing between living with 9 people or living with your parents is never fun).
Sometimes it can be tempting to throw up your hands and just say, “to hell with it, I’m just going to do what I want!”
One new Macbook Pro and 5 bar tabs later, you wake up and realize you’ve drained your bank account.
Oops.
To help prevent these moments (or at least minimize the damage), here are 5 financial habits to help you stay financially aware and financially sane as you build your freelance career:
#1: Check your bank account balance daily
Knowing exactly how much money you have takes away the fear of the unknown and anxiety that comes with “keeping track in your head.”
Take away the fear of the unknown: check your bank account balance daily. #smartmoney
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(As a freelancer, you have a million and one other things that could use your precious brain space.)
Let technology keep a pulse on your financial picture.
Most banks will send you alerts on what your daily account balance is.
There’s also an app called digit.co (which also secretly saves money for you if you enroll in that feature) that will send you a text message with your daily account balance.
By checking your bank account balance daily, you will create an awareness about where your money is.
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#2: Pay off your credit card more than once per month
Even as a financial planner, I’ve been caught off guard by an unusually high credit card bill at the end of the monthly cycle.
It’s easy to get into a tricky cycle with credit cards, where you’re using next month’s cash to pay off this month’s credit card. That means to have to use your credit card to get through next month.
Guess what?!
There’s no rule that you can only pay off the credit card when you get the bill. You can pay off the balance every day if you wanted.
Paying off your credit card balance at least every few weeks will help keep your budget and spending in check.
Keep your budget and spending in check: pay off your credit card every 2 weeks. #smartmoney
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Bonus! Keeping your balance low will actually improve your credit score over time.
PS – YES, it’s okay to use your credit card! Read more about how to do it wisely here: Should you ever fund your business with a credit card?
#3: Review your finances once per month
Set aside a few hours per month to review your finances. Add up all of your income and expenses in the last one month period.
Sound painful?
You can make it easier by automating a few things:
Set up a separate bank account for your freelance income and expenses. This doesn’t have to be a “business account,” as banks tend to want to charge extra for those.
Create a Mint.com account and only link your business’ account(s). You’ll be able to keep track of all your finances and can “teach” the system to categorize transactions exactly the way you want.
Doing this every month is critical to being able to track progress and make sure you’re hitting targets.
It won’t always be straight line growth, especially when you’re a new freelancer, but you’ll be able to see whether or not it’s trending upward. That can buy you precious time to change a marketing strategy or cut expenses before you find yourself out of cash.
Check out these additional posts on mastering your financial situation:
How To Master Your Cash Flow In Under 60 Minutes Per Day
3 Big financial myths successful creatives don’t fall for
#4: Eat at least one homemade meal every day
It doesn’t matter what meal it is – whether you put together a quick yogurt-y thing for breakfast or make a sandwich to take with you to your coworking space.
Make a conscious effort to have at least one meal a day that you made at home.
Financial secret to success: eat at least one homemade meal per day. #smartmoney
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This will not only help keep your bank account (and body!) healthier, but will make eating out feel more like an event than the daily norm.
(I’ve definitely had days where I’ve had to eat out for every meal, but those are notable days.) By committing eating at home, you’ll likely find yourself eating in more often than not.
#5: Reward yourself with small treats on a regular basis
I promise, a few dollars here and there won’t break the bank.
Whether you eat lunch out once or twice a week or you have a daily afternoon espresso to get you going for the rest of the day, treat yourself.
Every other week, as I head in to record radio show episodes for a few hours, I stop by the local coffee shop and pick up a Dough doughnut (click at your own risk).
Often, we feel guilty as freelancers for spending money on things that feel frivolous or unnecessary, especially because we’re often on a tight budget.
More often than not, allowing yourself small yet regular indulges prevents you from actually draining your savings in one to-hell-with-it weekend.
Read more about the right time to spend money here:
Entrepreneurs: follow this one simple principle to avoid wasting your hard-earned profit
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Share your best tips
Do you have a smart money move that made a huge financial impact in your life and your business? Words of financial wisdom that kept you afloat?
Share them in the comments!