Financial Planning for the Self-Employed in 7 Valuable Tips

With efficient financial planning for freelancers, you can achieve your goals and have a balanced financial life!

According to data from IBGE, the number of self-employed workers broke a new record in the first quarter of this year, surpassing the 25 million mark. 

Among the many challenges that these professionals face, most are certainly linked to the financial area. 

How many of these businesses have been closed to date due to a lack of resources to invest in their growth and development?

How many of these professionals didn't know or weren't able to separate their personal finances from their business accounts and thus ended up having to look for other alternatives to support themselves?

To make the professional's journey easier and with greater chances of success, a financial planning transparent and disciplined can make all the difference. 

In today's text you will discover what financial planning is and you will also find some tips that will help you create yours. 

Don't miss the opportunity to bring financial success to your business and continue reading until the end!

What is financial planning?

O financial planning is a finance management tool. It is based on the process of financial organization based on the recognition of the current financial situation.  

Furthermore, it encompasses objectives and studies of possible routes to be taken to achieve these objectives. 

This tool can be used by individuals, legal entities and also by private and public organizations. 

Simply put, financial planning helps individuals to accurately monitor their expenses, profits and earnings, for example.

With good financial planning, it is possible to make decisions, change behaviors, habits and create effective strategies to achieve goals, the main ones being: 

• control over finances;
• financial balance;
• financial health up to date;
• assertive decision making;
• better quality of life.

With this tool, the self-employed person will be able to map their income and expenses, thus identifying where to save and economize, what needs investment and what can wait, where to move to achieve goals, etc.

In addition, you will also learn to separate your personal finances from your business finances, an attitude that can greatly influence the success of your business. 

Below you will find valuable tips that will help you make a financial planning for freelancers easily, but very efficiently. Check it out! 

How to make financial planning for freelancers?

One of the challenges that self-employed people face when organizing their finances is the fact that they do not have a fixed income. 

However, this should not be a reason to keep your finances disorganized: it will be up to you.

In fact, not having a fixed salary, that is, having a variable income, should be the main reason for the self-employed to make a financial plan. 

Not knowing how much you will receive each month or how much will enter your business's cash flow is one of the main reasons for keeping your finances organized.

This is because, certainly, you and your business have variable and fixed expenses that need to be paid to avoid a bigger debt, right?

Furthermore, you are solely responsible for paying certain rights and duties.

For example, under the CLT regime, the employer is responsible for deducting the contribution related to the INSS.

In addition, under this regime, the employee still receives vacation and a thirteenth salary. The Guarantee Fund is another example: the employer is responsible for deducting a percentage of the employee's salary for this purpose. 

In fact, this amount has a yield of 3% per year. 

As we can see, it is essential that a freelancer has financial organization: He is solely responsible for his monthly earnings and for maintaining and managing them. 

Check out the following tips to put into practice today in order to carry out an efficient financial planning for freelancers. 

1. Don't mix personal and business finances

Personally, I have seen many businesses sink because the person in charge simply mixed their personal finances with those of the business. 

In addition to being a very serious mistake, it can compromise both financial areas: taking your business down the drain and compromising your personal income.

A valuable tip to help you separate your finances is to have a separate account. If you are an MEI or fall under another regime, you can open a business account to manage your business finances. 

Among the best alternatives on the market, we can highlight, for example:

• Cora;
• Inter Bank;
• Wings;
• C6 Bank;
• Nubank.

2. Create a financial reserve

Financial reserves are what separate good financial planning from poor planning. 

We know that unexpected events happen in any area of our lives, and when you have your own business they are constant. 

To avoid having to use the company's cash or having to take out credit products, the ideal is to have a financial reserve to cover emergencies. 

Ideally, you should have at least three times the value of your fixed and variable expenses saved, the recommended number is up to 6 times.  

To make this alternative smarter, you can invest the amount and withdraw it with income when you need it. 

The money can be invested in a low-risk investment, with daily liquidity and can be withdrawn when you have an emergency. For example: 

• Digital accounts with income;
• CBD;
• Fixed Income Funds;
• Direct Treasury;
• LCI and LCA.

Don't forget to return the amounts withdrawn from the financial reserve every time you use it in an emergency and always keep it full. 

3. Write down and analyze your expenses 

Certainly, to have efficient control it is necessary that your fixed expenses are always noted down. 

This way, you can analyze the information more quickly and find out where your money is going.

Is this expense an investment or a thief of my money? Which expenses are necessary and which can be cut?

By analyzing your income and expenses, you can see what can be done to ensure that both are balanced. 

To write down and control what comes in and goes out, you can use many management tools, for example, notebooks, diaries, spreadsheets and applications.

An important tip👉 Discover the technique that Japanese people use to control their finances and save money.

4. Plan your vacations and time off

Another valuable tip that cannot be missed financial planning for freelancers is to plan to take weekly breaks and at least one vacation per year, just like CLT professionals. 

Set aside a monthly percentage to take a vacation. This step needs to be well planned considering that, depending on your field of work, you may not have any income while you are on vacation. 

Other than that, you might also consider hiring someone to help you while you're resting. 

It is important that you have saved an amount to pay off debts and expenses in the month you are resting and also for the following month.

This is because, depending on the area, it may take a while for business to return to full steam. 

Apply the money set aside during the year or leave it in a digital income-generating account, this way, you will redeem the amount with profitability.

5. Set realistic goals for your money

Have short, medium and long term goals, but set realistic goals. Of course, it is important to dream, but always keep your feet on the ground. 

Goals are essential to help us achieve a greater objective: having financial independence, traveling more, investing in studies, etc.

Other than that, to make the right investment choices, you need to have clear goals and objectives. 

And to achieve them, it is necessary to have good investments and good financial habits. It is like a cycle: one stage complements the other.

6. Create an action plan

Using your notes, analysis of the cats and establishment of goals, define a path to achieve them. 

However, at this stage it will be necessary to save, economize, cut unnecessary expenses, make investments that will bring profit, even acquiring an extra income is valid. 

Have discipline to keep your expenses under control and in balance with your income. 

To make your action plan easier, make a list of everything you need to put into practice to achieve success in your financial planning for freelancers. 

7. Use credit cautiously

Credit can be an ally for your business and help you boost it. However, if you use it carelessly, it can be your downfall. 

When applying for credit, first check your repayment capacity. Also, choose options with the lowest interest rates. 

Pay your bill on time to avoid accumulating interest and avoid paying in installments. Make a financial sub-plan based on your current financial plan to know how to use credit correctly. 

Conclusion

When assembling your financial planning for freelancers It is important to have discipline and total control over your income and expenses, nothing can go unnoticed, as it can influence the results. 

This tool is essential for anyone who wants to be successful in business and have a balanced financial life, so put these tips into practice today!

If you find it very difficult to carry out this process, you can ask for help from a professional in the field, that is, an accountant. 

Also, keep following the news on our blog, because here you will find a lot of content that will help you balance your finances, have extra income, invest and much more!

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