Did you check out my article in the December 2013 issue of REAL SIMPLE? It's a great reminder to take care of yourself during the holidays.
As part of my upcoming workshop "PERSONAL FINANCE FOR ARTISTS AND FREELANCERS" I realized that many people don't even know where to begin. Therefore, you are stuck and can't make your money goals become a reality. This article will help you get unstuck with your money goals and start seeing some results!
The first and most manageable thing a freelancer can do is get their snapshot as to where their finances are today. It can be summarized in 4 simple words:
OWN, OWE, SPEND and EARN.
The key is not to get overwhelmed by all the text and just boil it down to four numbers. Try to gather these four numbers every month.
* OWN: What exactly is the amount of their investments, bank accounts and any other assets? It could include non-liquid assets such as art.
* OWE: What is the exact dollar amount that they owe in cre.dit ca.rd de.bt, student lo.an de.bt, IRS back ta.xes, business lo.ans and friends/family loans? They should check their credit report as well because that is the number that the lenders look at, not the ones on your credit card statements.
* SPEND: What is the total dollar amount that they spend on a monthly basis? This is not just their fixed expense such as rent/mortgage. This includes variable expenses, business expenses have they spent over the year but averaged to a monthly number. This is probably one of the most important numbers a freelancers needs to know!
* EARN: What exactly did the freelancer earn YTD? Last year? What are their projected numbers for the next 3 months? While this seems obvious, most freelancers don’t know this number! This is the only number out of the 4 topics that is variable and can’t be as easily controlled.
To your financial success,
Galia