How financially secure is your future? Can you even answer that question?
The sad fact is that most women (freelance moms included) don’t do enough financial planning. Many of us are just too busy taking care of our families to bother with financial planning. As a result, many women aren’t ready to face the major financial hurdles of life when they arise.
In this post, we share ten financial planning tips targeted especially to freelance moms.
Ten Financial Planning Tips Especially for Freelance Moms
The following financial tips will help you plan for a more secure financial future:
- Make (and stick to) a budget. Without a budget, you have no real way of knowing where your money goes. There are many low-cost budgeting tools to help you create a budget that works for you and your family. Mint.com is one example of such a tool. Some other budget tools include Outright or BudgetSimple.
- Have an emergency fund. Many freelance moms create a budget that is too tight. You shouldn’t plan to spend every cent you make or you will have nothing left to save for emergencies. Most finance experts agree that your emergency fund should equal at least six months of living expenses.
- Establish credit in your own name. Another mistake that freelance moms make is not establishing a credit history in their own name. This is mistake because if something happens to your partner, you may have trouble getting credit for major purchases. Apply for a credit card in your own name and pay it off completely each month to build your own credit history.
- Have health insurance. You may think that skimping on insurance can save you money, but even one major illness or injury can set you back financially. Even as a freelancer, you do have some health insurance options. Look to professional organizations or even warehouse stores such as Costco, which sometimes offers group health insurance (which is cheaper than an individual plan).
- Set something aside for major life events. Don’t let the major life events take you by surprise. Start planning early for your kid’s college expenses and your own retirement. Early planning can keep you from borrowing money to cover college and will give you more retirement options.
- Be careful about borrowing money. When you borrow money, you pay the amount that you borrowed plus interest. It’s not unusual, over time, for the total amount you pay out-of-pocket on loan repayment to be double or triple the amount you borrowed.
- Establish a separate account for your freelancing business. Your freelancing is a business. As such, you should have a separate account for it. This will help you determine whether you are making a profit. It will also help you with your bookkeeping.
- Stay on top of taxes. For income tax purposes, a freelancer is an independent contractor. This means that you are responsible for paying your own taxes and the self-employment tax as well. To make sure you don’t owe money on tax day, you should make estimated quarterly tax payments. See the IRS site for more information.
- Don’t undervalue yourself. Many freelance moms charge less for their services than what they are really worth. There are many reasons for this, ranging from lack of confidence to not knowing what market rates really are. Do some research to learn your true value as a freelance mom and charge accordingly. This Freelance Folder post lists some pricing principles to help you set your rate.
- Hire expert help when needed. From keeping accounting records to designing your website, many freelance moms try to do everything by themselves. Doing something you don’t really understand can take a lot of time and may cost you money in the long run. It’s usually worth it to hire an expert to do an unfamiliar task.
These financial tips are really just the beginning when it comes to women and finances. There are many other factors to consider.
Learn More About How Finances Affect Women
Do you want to learn more about women and finances? Here are some great resources to help you learn more:
- From Eve Kaplan at Forbes, Financial Advice For Women: Your Needs Are Different. This piece at Forbes explains why women have different financial needs than men.
- From Robert Brokamp at MSN Money, Women: 5 steps to salvage retirement. Look for the great video at the end of this piece, which explains how to maximize Social Security benefits.
- From Jill Krasny at Business Insider, 10 Charts About Women And Money. There’s a wealth of information in these ten infographics. Study them carefully.
- From Miranda Marquit at GoodFinancial¢ents, Top Ten Best (and Free) Online Budgeting tools. If you’re looking for a good budgeting tool, here are some of the best free options.
Where Do You Go from Here?
The sooner you start planning for your own retirement, the more retirement choices you will have. Even putting aside a small amount each month can make a difference.
Why not take the first steps to securing your financial future this week? Contact a financial planning specialist to learn what would work best in your specific situation, create a budget, or just start saving.
How do you handle your financial planning?
Share your best financial tips in the comments.
