With the immense freedom of freelancing comes the great responsibility of taking charge of your own financial future.
Those who opt for the freelance world can't rely on the company 401(k). Just like with healthcare, a steady flow of work and funding for office supplies, you're on your own.
Next to finding quality healthcare, savings and investments are probably the scariest topics for anyone managing life in the gig economy. However, those who put the same ingenuity and sense of ownership into building a freelance operation have the skills necessary to do the same with their finances. [Read related article: Looking to learn more about managing finances? Check out our money management guide for freelancers.]
1. Think like a business.
A good mindset to develop, and one that benefited my own career, is to think and plan financially as a though you're running your own business. This means strict budgeting for expenses and thinking through financial decisions with an eye toward the future.
Financial planning ensures you are making the best effort to secure your financial wellbeing. Even if you are a one-person operation, you need to think about where future revenue is going to come from, operating costs and the overall financial health of the business. Unlike in a traditional job, there isn't a set salary or annual pay bump to rely on. While specific advice varies, many financial experts recommend that you live on half your income as an entrepreneur.
2. Invest for the long term.
Apps like Robinhood, while altogether excellent for how they have democratized access to investing, shouldn't be the sole output of your financial strategy. The market is volatile. Stocks rise and fall. Day traders aren't likely to strike it rich.
Look into investments that are built to deliver wealth over a long period that can ride the inevitable rise and fall of the markets, especially if times when the market tanks will send you into a panic. Think about the bigger picture, especially if you are supporting a family or have a spouse or partner who also works independently.
3. Seek out advice.
Doing it yourself is empowering and all, but there are many situations where you'll have to call in the experts.
Financial advice may not be free, but working with an advisor is usually worth it. As with choosing a good doctor or dentist, you may need to invest some time in finding someone who best fits your needs and offers value to your specific situation.
The best advisors won't overpromise, and they will build a financial investment strategy that suits your needs. If you're a more conservative investor, you won't want someone who is going to push you on the hottest startup. If you are in a position to be more aggressive, you're likely to get frustrated if someone is constantly telling you to dial it back (although maybe it's worth heeding that advice).
Expertise matters, especially when it comes to your financial future. And while it may sound like a cliche, that future will certainly be here before you know it. Just make sure it isn't before you're ready.