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| How stable is the future of freelancers? (photo credit: Petr Kratochvil) |
It's not surprising why a lot of people are reluctant to jump into the band wagon of freelancers. The road to working from home is rife with risks and challenges.
Self-employment and freelancing would usually mean living project after project and working for a client who might no longer require your services one day.
The pay is as good as it gets, yet are you doing something to achieve security over the long term?
A prudent agent gave me a planner a year ago. As I browsed through the pages, I realized that of the many gift ideas for freelancers, the most practical would be financial security.
The pay is as good as it gets, yet are you doing something to achieve security over the long term?
A prudent agent gave me a planner a year ago. As I browsed through the pages, I realized that of the many gift ideas for freelancers, the most practical would be financial security.
Financial Planning for Freelancers
The financially wise insist that if you want to boon yourself with security and monetary stability, you should start as early as possible. When freelancing:
- Remember to save. A good buffer would be an accumulated savings equivalent to 6 to 12 months of your earnings. This is a good amount to cover for short-term and immediate needs. You can easily withdraw and use your savings as needed.
Savings represent the net amount when you deduct your total expenses from your total income. If you're getting negative figures, then consider how you can raise your earnings and minimize your expenditures.
- Acquire assets. Considering the very low interest rates of banks, it will be unwise to put all of your earnings into your savings account. Filipino freelancers must keep in mind that only up to P500,000 is covered by the Philippine Deposit Insurance Corporation. Filing the necessary paperwork and claiming the money in case your bank goes bankrupt could take you years.
This is why it's wise to purchase assets from your excess savings. Assets take the form of time deposits, properties, insurance coverage and plans. They function as safety nets over the long term and are convertible to cash. Assets assure you that you have enough funds to cover major expenses in the future.
- Invest. While savings help you to stay liquid and assets keep your funds secure for future use, investments allow you to move your money. Depending on how you play it, you can either make your money grow or lose it. The risk is always proportional to the reward.
Investing is ideally equated to profit-making or enabling you make more money from your money. This can take the form of higher education, stocks and bonds. Unfortunately, with so much emphasis placed on budgeting to cover for day-to-day living, very few people have the means to acquire assets and make investments.
