Financial planning, as the name suggests, is the process of organising your finances, investments, and assets in such a way that you can easily achieve both personal and professional goals. Since freelancers and entrepreneurs don’t have the steady income or benefits that full-time employees enjoy, managing money smartly becomes even more important for them.
Be aware that a good financial plan helps you to handle fluctuating income, late payments, and unexpected costs. This planning offers financial stability and makes it easier to handle uncertainties. To do so, you should ideally associate with a good financial institution offering a range of products.
NBFC in India offers personal loans, business loans, loans against securities, and gold loans. In this article, let’s understand in detail how freelancers and entrepreneurs can do smart financial planning and timely manage their money needs.
Top 5 tips for better financial planning
Most freelancers and entrepreneurs start their careers feeling 100% motivated. However, challenges like late payments from clients and inconsistent work create “unstable income”. Since there’s no guarantee of regular monthly earnings, this makes financial management more complicated.
That’s why freelancers need to develop a solid financial plan. Such a plan helps you to manage income fluctuations and ensures there is a safety net for tough times. Below are the five most important personal finance tips you should consider to achieve stability:
1. Keep track of your expenses
As a freelancer, you must keep tracking your expenses. Ideally, your freelance or business earnings need to cover all your costs. Hence, it is important to know exactly where your money is going. To make an assessment, start by reviewing your expenses from the past 3 to 6 months. While reviewing, list down all fixed costs such as rent, utility bills, and debt payments.
Now analyse the compiled information and identify unnecessary spending. Try to cut back where possible. Usually, as an entrepreneur, interest cost eats a major chunk of your profit. To gain better financial control switch to renowned lenders offering loans at a lower rate.
2. Check your income-earning potential
Besides expenses, tracking your income as a freelancer is also important. This analysis helps you to check how much money you’re making and where it’s coming from. Since earning income is one of the main reasons for freelancing or running a business, you must know exactly how much you earn and how valuable your time is. This awareness will help you set the right rates for your work.
In addition to tracking current income, you should also predict future earnings. By forecasting how much you expect to make in the coming months, you will have a clearer idea of your financial goals and how much more work you need to do. To make an analysis, simply list the projects you have booked, the clients, payment details, and expected earnings.
3. Use low interest EMIs while shopping online
Since your income is unpredictable, buying products through EMIs can be helpful. Ideally, you should opt for low-cost EMIs from credible lenders. This allows you to make large purchases without paying high interest rates. Since freelancers often don’t have guaranteed income, paying in smaller, manageable chunks becomes easier.
You can convert purchases like electronics, and home appliances into Easy EMIs, with features like zero down payment and lower EMI special schemes, from online stores. Even the repayment terms are flexible and range from 1 to 60 months.
4. Smartly control your rates
As a freelancer and entrepreneur, you must manage your rates smartly. This gives you financial control and protects your earnings. By setting clear pricing and negotiating fair contracts you can ensure steady profits.
Additionally, as freelancers, you often face challenges such as late payments, underpayment, and long payment terms like NET 30 or NET 90, where clients delay payments for 30 to 90 days. In such cases, to avoid financial strain, you can consider taking personal loans. You can get a personal loan ranging from Rs. 20,000 to Rs. 40,00,000 without the need for any guarantor or collateral.
5. Try to grow your business
As a freelancer or business owner, you must try to grow or expand your business. This not only increases your earnings but also lets you achieve higher profits. However, to scale your business, you will often need extra capital or funding. As a tip, you should try to get a business loan from a reputable financial institution that provides loans at affordable interest rates and without strict requirements. The loan repayment period is flexible, with tenures ranging from 12 months to 8 years. In most cases, the loan amount is transferred to your bank account within 48 hours of approval. There are no hidden charges and all fees are clearly stated in the loan documents. Additionally, no collateral is required and you are not required to provide security to access the loan.
By doing smart financial planning, freelancers and entrepreneurs can easily manage the uncertainties of irregular income and unexpected expenses. To gain control over your finances, regularly track expenses and income and manage rates. Also, save on interest costs by opting for low-cost financing options offered by renowned financial institutions.
Additionally, while shopping online from any online/offline store, try to convert large purchases into smaller low-interest EMIs. Moreover, during times of financial emergencies and lack of work, consider taking personal loans at competitive rates.
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