Navigating the freelance financial landscape can be stressful, and sometimes you just want to enjoy the creative parts of your career without getting mired in the details of running your business. Nailing down client payments, paying the bills and keeping track of the increasingly confusing tax code all take time away from the work you love and the magic you create for clients.
In the age of chatbots, AI and robots, automation is driving everything — including how creative indys are running their businesses. From sophisticated algorithms and tools to simple secrets that streamline the freelance finance adventure, here are a few ways to lower your stress and reach your goals by automating part of your business.
A healthy emergency fund is a must-have for freelancers who have constantly shifting incomes. For freelance editor Jess Shephard, automating her savings was key.
“When your income jumps around from week to week or month to month, it can be hard to hit specific savings goals,” says Shephard. “I set up my account to automatically save 10 percent of every check or payment that I receive. On top of that, I automatically sweep 25 percent of what’s left over after bills, taxes and retirement contributions at the end of each month into savings. It adds up faster than you’d expect.” Many banks offer tools that make it easy to automate savings and put money away before you spend it. Reach out to your financial institution today to learn more about your options.
Put Retirement on Autopilot
If you’re among the nearly 40 percent of self-employed workers that CNBC says aren’t saving for retirement, it’s time to get started. Of course, retirement savings can fall by the wayside when other financial priorities take precedence, but once your other finances are in order, prepping for life after retirement is one of the most important things you can do. Get a jump on it by automating your retirement contributions on a monthly or quarterly basis. Whether you choose a set amount or a percentage of your annual income, automatically contributing to an IRA or SEP 401k will make your future retirement a reality. And when you know the future’s taken care of, it’s easy to show up fully energized to deliver your best work for clients.
Track Your Spending
Freelancers need to keep a tight rein on spending, both for cash flow and expense tracking. It takes only one trip to the bookkeeper with an overflowing box of receipts before you realize there has to be a better solution — and, luckily, there are several. Use an app that automatically tracks your spending, like Mint or You Need a Budget, which integrate with credit cards and debit cards to track your finances, even according to category. You can also enter cash expenses and even snap pictures of receipts in some applications. Automatically keeping track of your spending not only simplifies your recordkeeping at tax time, but it also reduces the chances you’ll overspend on your next business lunch or supply purchase.
Pay Credit Cards in Full
Credit card rewards add up. This year, I used miles to book hotels, flights and rental cars for an industry conference that netted me a valuable new client. However, using credit cards responsibly is key to this strategy. I’m not a details person, and one late payment can completely slay your credit score. By setting up your credit cards to automatically pay off in full each month, you can build better credit, rack up those miles and streamline your spending. Keep in mind that there’s one caveat here: You have to monitor your spending and make sure you have enough in your checking account at the end of each month to avoid being overdrawn or bouncing a payment.
Automate Quarterly Tax Payments
As the old saying goes, two things are certain — and one of those is that freelancers will have to pay quarterly taxes. But we’re all very aware that staying on top of estimated taxes can take a lot of energy. You can automate this process by using a service that keeps track of your income and sends out electronic tax payments on a quarterly basis — eliminating the need to write a check or run to the post office.
Track Your Invoices and Payments
Darrell Cooper owns a computer repair consulting business, and he knows the ins and outs of tracking finances. “The biggest thing for me was automating invoices and payment tracking,” he says. “Some customers are small jobs and others are big monthly retainers — but every dollar counts. Once I send out invoices, I don’t have a lot of time to track them down.” Cooper uses a program that sends out recurring invoices automatically, reminds customers of payment due dates and sends out delinquent notifications.
The program also sends weekly reports of payments received and payments outstanding — sending Cooper a warning message when a customer is a week overdue on payments. “That saves me a lot of time in watching for small payments, but lets me know when it’s time to hop on the phone,” he says. Automating your invoicing can keep your cash flow strong, while saving you both time and energy.
Ultimately, learning to stay on top of freelance finance needs is critical to a sustainable career, and automation can help. Take a closer look at which aspects of your financial picture you’re struggling with, and look for ways to use the latest tools to reach your freelance finance goals and eliminate delays, busywork and stress.