Online freelancing is one of the best ways to use your skills to make money online. In fact, freelancing contributed $1 trillion to the US economy in 2019.
There aren’t any statistics on how online freelancers have contributed to Jamaica’s economy. However, I believe the impact freelancing has on the US economy can be replicated in Jamaica if more Jamaican online freelancers understand how to successfully win clients and manage their money.
It’s important to view online freelancing as a business rather than a side gig. Developing this business mindset can help you see opportunities to branch off into other ways to make money online, such as e-commerce and online course creation, so that you aren’t limited to trying your best to win jobs and pinch your pennies.
That’s one of the reasons I wrote the book “The Business Playbook: A Guide for Jamaican Startups”. I want you to view your online freelancing career as a way to create a successful business in Jamaica that can stand the test of time. You can get your copy here.
I’ve been an online freelancer for about seven years. In September 2019, I quit my full-time job to pursue online freelancing full-time. I know that I am not where I need to be financially but I am earning (on average) 1,000 USD in my best months.
Here are some of the top money management tips I have learnt since transitioning into online freelancing fulltime.
There Is No Perfect Schedule for Withdrawing Funds
I am an UpWork freelancer. Therefore, my monthly income is heavily dependent on when my clients decide to release the funds for each project I complete. I attempted to wait until the 25th of each month to withdraw funds for two reasons:
- my car payments are due on the 27th of each month
- I wanted to give the money a chance to accumulate
However, I have found that this strategy hasn’t really been working well for me. Costs pop up throughout the month that result in me breaking the schedule and withdrawing funds prematurely. Therefore, I’ve opted to withdraw funds on twice per month instead.
I recommend finding a schedule that works best for you. However, it shouldn’t be a schedule where you withdraw funds as soon as they become available to you so that you can cover immediate expenses. Plan your schedule and your payments in such a way that you give the funds a chance to accumulate.
Set Aside 20% of Whatever You Earn
Anyone serious about managing personal finances will tell you that you should at least save 20 percent of whatever you earn. Maintaining this discipline is important for you as an online freelancer.
Sure, you probably aren’t earning a lot of money as an online freelancer. You’ve got bills to pay and a family you need to provide for. Heck, I have car payments and a tuition of roughly 1,500 USD to pay each semester. I also try my best to help around the house financially.
Nevertheless, saving is important. It doesn’t matter if that 20 percent amounts to 20 USD. Save it! These savings add up over time.
Invest In Online Growth Opportunities
You won’t be an online freelancer forever. One of the greatest lessons I’ve learnt over the past nine months of doing online freelancing full-time is that this career is not sustainable in the long-term.
I have financial goals and a vision for my future. Therefore, the only way that I can make this online career work is if I invest in more than just online freelancing.
The money that I am saving from the 20 percent of whatever I earn will go beyond paying my car insurance and taxes. I intend to find a way to use it to set up a viable way to earn passive income online.
I haven’t hit the nail on the head yet, but I will someday soon. Some options I am considering are:
- online course creation
What online growth opportunities have you been considering for your brand? Let me know in the comments below.
Create a Monthly Budget
I find monthly budgeting one of the most difficult things to do, especially when I am so uncertain about what my income will be each month. However, I know that monthly budgeting is something I need to practice if I want to get a better grip on my finances and have all the data I need to file my annual taxes.
Here are some things I’ve been doing to get my monthly budget off the ground:
- Keep all my receipts
- Log my income at the end of each week
- Create a rough draft of my income and expenses at the end of each month
- Use the figures from the previous month to make projections for the upcoming month
- Set an income target for the next month based on the figures from the previous month
I haven’t gotten this perfect yet. To be honest, I’ve been very inconsistent. However, I plan to take monthly budgeting more seriously so that I can set realistic income goals based on actual data. Check out these 10 tips for managing small business finances to download a free copy of the spreadsheet I use for monthly budgeting.
Create a Business Account to Separate Your Personal and Online Income
You may disagree with me but I find immense value in creating a business bank account for my online work. This account helps me keep my online income separate from any other personal money I may have. It also helps me keep tabs on what my business is actually earning and how well it’s doing.
Setting up a business account does require business registration. However, the benefits of business registration outweigh the costs. Here are some benefits I have experienced:
- Building a financial reputation that increases the likelihood of future funding opportunities
- Showing that I am earning income despite leaving my full-time job
- Continuous payment of NIS contributions so that I have something for retirement
- A financial track record that makes me eligible for loans in the future without the hassle of having to prove source of income
The paper trail you create will benefit your online business in the long-term despite the taxes and bank fees that you may have to pay.
Treat your online freelancing career like a small business rather than a gig. You aren’t earning a little money to help you survive. Instead, you’re earning money that you can use to increase your online growth opportunities and earn even more money. The five tips outlined in this article can help you better manage whatever you earn as an online freelancer.
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Cheers to your success!