Finance for the self-employed – everything you need to know

Learn more about finances for freelancers through this guide!

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Finances for self-employed people are a constant concern for those who do not have a fixed salary.

And if you are self-employed, you know the importance of financial organization to avoid debt and achieve goals, whether short or long term.

To help you, we created this article!

Want to learn more about the importance of finances for freelancers and check out our tips? Then keep reading.

Financial planning: what is it and why is it important for freelancers?

The first step is to create a financial plan.

But after all, what is this?

Financial planning, Basically, it means organizing your finances, controlling your monthly expenses and recording all your earnings.

This task is necessary so that you can identify which expenses most compromise your earnings.

Of course, there are expenses that cannot be avoided, such as rent, electricity, condominium fees, among others.

However, it is important to analyze your expenses to see if you are perhaps spending too much on something that is not essential.

For this reason, financial planning is considered a very important tool for those who want to organize themselves better.

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How to do financial planning for freelancers?

Now you know what financial planning is for freelancers and its importance for organizing your financial life.

So, it's time to learn how to plan, so that you can better control your budget.

Check out the tips we’ve prepared so you can put together your planning:

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1. Separate personal and business finances

It seems obvious, but the truth is that many freelancers make this mistake.

So, here's our first tip: separate personal and business finances.

By mixing money from your personal life with your professional life, you run the risk of losing financial control or causing one of these two areas to be disadvantaged.

So, if you really want to control your budget and improve your financial health, start by separating your accounts.

This way, you can better control your personal and professional budget.

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2. Understand your expenses

The second step is to know what your monthly expenses and income are.

This way, you can create strategies to achieve greater financial balance.

In this section, write down all your expenses on paper (or in a spreadsheet). See what is truly essential and which expenses can be eliminated, at least partially.

Non-essential expenses, no matter how small, can snowball and compromise your budget.

Once your expenses have been defined, set aside the amount needed to cover the costs involved.

If the budget doesn't add up, it's necessary to rethink some costs and, of course, make some changes to your personal financial planning.

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3. Create a financial reserve

The financial reserve is an amount set aside for emergencies.

In other words, it is the amount you have available to use in the event of an unforeseen event that compromises your expenses.

The financial reserve is also called an emergency reserve. In other words, as you can see, this money should only be used when necessary!

Unforeseen events happen in any area of life, whether personal or professional.

Therefore, it is essential create a financial reserve.

Ideally, your reserve should be invested in an account with income, as this can generate even more profits.

When it comes to financial reserves, you need to look for investments that offer immediate liquidity, so you can withdraw the money whenever you need it.

A good option are digital banks, which offer immediate liquidity and higher returns than savings, such as Nubank and Picpay (digital wallet), for example.

4. Plan your breaks and vacations

The self-employed worker does not enjoy the benefit of paid vacation.

However, this does not mean that you should not rest, on the contrary.

Time off and vacations are essential for you to relax your mind, take some time for yourself and thus catch your breath when you return to work.

However, for this to happen, it is important to plan.

Plan your vacation and the estimated amount you will need to stay off work on the planned days.

Save a monthly amount for these expenses, so you don't compromise your planned budget.

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5. Use your credit card wisely

Contrary to what people say, a credit card is an excellent tool for organizing your financial life.

In fact, for self-employed people, credit cards bring even more benefits.

Having more than one credit card is also a good option, in this case, you will benefit from different expiration dates and, therefore, be able to plan your expenses throughout the month.

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6. Think about the future

Regardless of whether you are self-employed or not, it is important to think about the future.

To do this, you need to include long-term goals, both personal and professional, in your planning.

It is also important to invest your money in safe applications with good potential for returns.

As the focus here is more on the medium and long term, the liquidity of the investment is not as essential (as is the case with the emergency reserve).

In any case, the ideal is that you study the available investment options, set goals and know exactly what your investor profile is.

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7. Have working capital

Working capital is basically the money needed to maintain business continuity.

This money is essential so that you do not depend solely on cash inflows.

For this reason, it is essential to organize your cash flow. This way, you can plan your expenses and honor all your financial commitments within the stipulated deadline.

Conclusion

Finances for freelancers can be managed more efficiently with organization and planning.

After identifying your average income and main expenses, you need to make adjustments and, of course, include all these factors in your financial planning.

We hope these tips have been helpful to you!