The freelance wave is rapidly spreading across the world, demonstrating its irrefutable advantages. About 60 million self-employed workers in the US expect an impressive replenishment of their ranks in the coming years and plan to become the main labor force of the country by 2028. And this is already a serious claim to victory in the eternal confrontation "full-timer vs. freelancer.”

However, it's not all that cloudless. Unlike the classic full-time job, you do not get a stable salary, and, accordingly, budget planning is somewhat complicated. How to maintain a financial balance and earn more than you spend? How to avoid the stress of uncertainty about cash flows?

This is not as difficult as it seems – otherwise, freelancing would not be so desirable for millions of people, and it certainly would not be able to pave its way to potential leadership in the labor market. So grab these six tips, shaped and polished by advanced self-employed workers who have taken control of their finances.

Tip #1. Train Yourself to Money Tracking

What may have seemed fun or odd to you before becomes a necessity if you have chosen the path of freelancing. To do this, you have a myriad of possibilities for every taste: create a spreadsheet with all the data on the incoming payment, download an application in which you can do the same, or write everything down in a paper notebook, if this is more convenient and familiar to you. At the end of the month, you will know exactly how much you have earned, and you will not have to collect this information bit by bit in work chats, e-mail, and who knows where else.

Tip #2. Determine Your Average Monthly Income

In exchange for an exemption from the fairly strict 9-5 regime, you give up a stable salary, insurance, and participation in a 401(k) plan. These are losses that are easy to deal with when you remember that every month you have a chance to earn more than in the previous month if you manage to find clients.

Take information from the previous tip, for example, for the last year, half a year, or for as long as you have been working on a freelance basis. Divide the amount by the number of months and get your average income. If you have been working for a long time, you can even compare your last year's income with the current one and determine whether you have started earning more or not. This can provide a basis for reflection: it might make sense to expand specialization or improve qualifications.

With your average monthly income in hand, you can start budgeting.

Tip #3. Dive into Budgeting

Sooner or later, you will have to face taxes. Yes, taxes will definitely knock on your door even if you are not a full-time employee. Do not be afraid of this, because forewarned is forearmed.

Before we start budgeting, grab a quick tax note. As a freelancer, you will have to bear the burden of two types of taxes: the standard income tax and the self-employment contribution. The first is calculated as total income minus all deductions. The second is 15% of your freelance income. This one represents social security and medical taxes that regular employees automatically have deducted from their paychecks. On average, you have to rely on the fact that at least 20% of your monthly income will have to be given to the state. The figure may vary depending on your tax bracket.

In addition to taxes, you probably have fixed monthly expenses like rent, water and telephone bills, and more. Consider them in advance. Also, a priority expense is buying food. And although it may not always be accurately calculated in terms of budgeting, make it a top priority along with taxes and try to determine the average cost for it over several months. Then it will be easier for you to determine how much of your income goes to buying it.

Once the essential expenses have been identified, you have room for lower priority issues. This can include buying new household items, clothing, vacations, or just savings that you need for a certain purpose. If you don't have health insurance, it might be a good idea to set aside some amount that will be your cushion if, heaven forbid, something happens to your health. Better safe than sorry.

Tip #4. Save Money for Retirement

No matter how distant this prospect may seem to you, it makes sense to think about it now. We have mentioned that when you switch to freelancing, you give up your retirement benefits, including 401(k). This does not mean that the prospect of old age poverty is already on the horizon – you just need to take matters into your own hands.

Just one small thing is lacking: create a retirement account and allocate there a monthly fixed transfer. If you are experiencing financial difficulties, it may be quite small at first. But payments must be regular: this is the only way you can accustom yourself to financial discipline.

Remember, however, the budget set in the previous tip, and don't try to replenish your retirement account at the expense of something else.

Tip #5. Create a Separate Card or Account For Work Finance

Masterly money manipulation for a freelancer is achieved through extensive experience and constant practice. The more clearly you can structure the financial picture of your work, the faster you will achieve the desired virtuosity. The following tip may help you with this.

Create a separate business account, which will receive all your money from completing tasks for clients, and then pay your salary to your personal account or card, net of taxes. This can be of great help if you are still confused about tax deductions and have difficulty separating them from your personal expenses.

Tip #6. Always Fix Invoices

No matter how long you have been working with a client and no matter how trusting your relationship is, it must be documented – cooperation etiquette requires this. Moreover, it is your safety and that of your client. Therefore, decide in advance whether you will be using some software or manually creating and sending invoices. Once you get paid for the invoice you sent, mark it down on the spreadsheet that you hopefully created when you read the first tip.

Thus, you can avoid misunderstandings about the lack of payment for the work done, as well as receive a documentary confirmation of your income.

Final Financial Thoughts

You are in the freelance world now, and this is not an army at all, unlike the famous song of the legendary British from the Status Quo band. Dealing with the financial side may seem exhausting and even daunting at first, but later you will find that it can be done easily, given the desire and motivation. Using our tips, you can get your finances in order pretty quickly and fully enjoy all the benefits of self-employment.

Marie Barnes is a Marketing Communication Manager. She is an enthusiastic blogger interested in writing about technology, social media, work, travel, lifestyle, and current affairs.