Lesson 4: How to manage your earnings as a freelancer or gig worker
When you're making income from more than one client, it can be tricky to record and accurately manage your finances. In addition, many companies pay their freelancers or gig workers on unique schedules, making it more difficult to set money aside for savings.
As a freelancer, work can come in peaks and valleys. Even if it seems like you're busy for weeks at a time, you can find yourself with a cash shortfall while your unpaid invoices are being processed.
A common piece of advice is to save three months' expenses before taking a new job or switching jobs, since you will inevitably have an initial period without pay. Additionally, you should create a strict budget and stick to it until you arrive at a consistent pay schedule that allows you more financial freedom.
Ask your client's HR department about when they typically pay their freelancers and if you can set up a direct deposit.
Consider using an online budget builder, like the Chase budget builder, to appropriately track incoming and outgoing funds.
Limit disposable spending in between jobs and pay cycles so you don't find yourself in a money crunch.
Actively communicate with your client's accounting department to ensure you're in the know about any potential changes to the pay schedule.
Be sure to accurately document any pay discrepancies. Read through all documents provided carefully to ensure you're being compensated properly. It's a good idea to individually record each payment and track for consistency.