Freelance Financial Responsibilities

Knowing Your Freelance Writing Financial Responsibilities

Last Updated on by Michael Brockbank

Being a freelance writer is more than just writing content for clients. You need to have awareness of your financial responsibilities as well. Working from home isn’t without its monetary pitfalls. And if you’re not careful, it could cost you.

I’m not saying you shouldn’t explore a freelance writing career. However, you want to keep in mind a variety of financial elements that you have to take care of yourself.

Financial Responsibilities of Every Freelancer

Regardless of what kind of freelancer you are, being mindful of financial responsibilities will save you a lot of trouble.

And I’m not merely talking about paying your bills or keeping food on the table. Those are just the obvious points.

Let’s take a look at some of the more vital things you’ll need to keep track of.

[adrotate banner=”8″]

What Financial Responsibilities to Consider

In a business environment, most financial responsibilities are taken care of automatically. Unfortunately, freelance writers do not have that luxury. Which is why it makes it more difficult to work from home from a budgeting standpoint.

Paying Taxes

Benjamin Franklin said it best; “nothing can be said to be certain, except death and taxes.” Even though ol’ Ben wasn’t the first one to say this, he’s often the most attributed for the quote.

Depending on where you live, you’ll need to pay your fair share of taxes. Otherwise, organizations like the Internal Revenue Service will come knocking on your door.

I know some of you are crossing your fingers and hoping no one notices. In reality, it’s only a matter of time. And if you don’t want to face an audit, you need to keep taxes in mind.

Health Insurance

Many freelancers will make more than the cap for Medicare and other low-income health services. At which point, you’ll need to find alternatives for health insurance.

Unfortunately, this can get quite costly as you don’t get the benefit of a “group discount” when working for a business.

If you’re lucky, you might benefit from a spouse’s insurance. But what if you live alone? Just when you don’t think you need it, something might put you in the hospital.

Vacation Time

Looking to take a vacation away from it all? Are you sure you can financially support taking time off? Not every freelance writer gets a paid vacation, which means it will come out of your pocket…in more ways than one.

A lot of freelance writers will take “working vacations.” But that’s not really giving you ample time to relax, is it?

The most important key point to keep in mind is having enough money set aside to cover yourself on the days you’re not writing. If you take a three-day camping trip, are you sure you have three-days worth of money available?

Of course, if you take advantage of a weekend, then it really doesn’t matter. But what about a week in Italy? What if you spend five days with the family in Hawaii?

Covering Your Sick Leave

Suffering from a 103-degree fever and need to take time off? Unfortunately, part of the financial responsibility of the freelance writer is to make sure there is enough in the bank to take a day to recover.

Most freelancers do not get paid sick leave.

And I cannot stress enough how bad it is to write while facing a terrible sickness. You’re less efficient, less focused and are more prone to mistakes.

This doesn’t even include having to go to the emergency room or afford medication.

Retirement Funds

Do you have a nice nest egg for retiring? Many of us freelance writers do not have a 401k or any other real plans for retirement. It’s never too early to start putting aside something to help subsidize income when you start getting up there in age.

Too many people wait until the last minute to start saving. The truth is you’re far better off by starting early. And if you put away enough, you might get to retire far earlier than other people.

Of course, that depends on how you invest your money and what methods you use to save.[template id=”2087″]

How to Save for Financial Responsibilities

Because money isn’t automatically deducted from pay most of the time for freelance writers, you need to find viable methods yourself. All of the above financial responsibilities are vastly important.

Too important to ignore.

Here are several ways I try to keep ahead of these monetary concerns.

1. Setting Aside a Certain Amount

Personally, I try to set aside a minimum of 10% of what I make into some kind of financial portfolio. In reality, I still don’t think this is enough.

It’s probably in your best interest to find a percentage that gives you enough money to live, but also save for the above issues.

You don’t want to short-change yourself, but you do want to make sure all of your financial responsibilities are covered.

2. Using Savings Accounts

Savings accounts work great for keeping money set aside. However, I don’t trust myself around these types of accounts. That’s because they are super easy to access most of the time.

And if you’re an impulse buyer like myself, it’s easy to pull money out of the savings account to blow on something frivolous.

I know a lot of you probably have the will power, but I bet many of you don’t.

On the other hand, there are some banks that will prevent pulling money out until a certain date or if you reach a specific total value.

3. Using Stash to Save

I like using Stash Invest as it helps keep the money out of immediate accessibility. True, you’re essentially investing in stocks. But what makes Stash a good platform is the type of stocks you’re buying.

Stash uses ETFs, Exchange Traded Funds. They are based on the most stable and reliable businesses in the world. As a result, it’s very unlikely for ETFs to lose value over time.

In fact, I have yet to see a Stash ETF consistently drop in value over the course of a year.

And that’s the key part of ETFs. You’re using them to invest in the long-term. You won’t get rich overnight with ETFs, but they work great to save for something like Christmas or retirement funds.

4. Are Stock Investments Safe?

A lot of people find safe stock investments to save up their money. And while some stocks prove to be great for long-term dividends, you need to be wary.

A business could easily collapse dropping the value of the stock. In the end, you could lose a lot of money.

If you truly want to use stocks to save up for your financial responsibilities, invest in something that has staying power. Companies that do well and stick around longer than four years are more likely to succeed.

Don’t go for the new “sure thing” businesses.

One of my favorite sayings regarding gambling works just as well for stock investing: “Never bet anything you can’t afford to lose.”

Don’t Forget Your Financial Responsibilities

As a freelancer, you’re accountable only to yourself. That is, until the IRS or state tax commission come after you. Make sure you’re planning for your financial future, even if you don’t think you’ll use it.

Wouldn’t it be great to take a week off and know you have enough money set aside to make up what you won’t make while on vacation?[template id=”2089″]

Michael Brockbank
Follow Me...

Subscribe
Notify of
guest

This site uses Akismet to reduce spam. Learn how your comment data is processed.

0 Comments
Inline Feedbacks
View all comments