Running a freelance business is a lot of flying-by-the-seat-of-your-pants feast or famine. This can play havoc with your finances, especially if you aren’t prepared to handle emergencies when they arise. Here’s how to make your finances as stable as possible so you can be less stressed.

Insurance

Nothing can be worse than having a disaster strike your family – a costly one – that you’re unable to pay for. It’s a tragedy that all too often befalls freelancers that have neglected to get the right insurance. I know, I know, you don’t want another bill to pay, but insuring all areas of your life can literally be a lifesaver.

Look into getting insurance for:

• Vehicles

• Pets

• Health

• Home/Rental

• Funeral (life insurance)

• Business

• Coverage for if you get hurt and aren’t able to work for a short amount of time (like Aflac)

Be sure to check the small print before you sign up and beware of companies that raise rates and deductibles without warning. Sometimes the company with the lowest price isn’t the right one for you. Check out a company’s reviews and talk to your friends and family to find an insurance company you can trust.

Budgeting

The current economic climate has millions of freelancers struggling to put food on the table and living from paycheck to paycheck every month. To make your money go a little further, create a stringent and all-encompassing budget so that you can see exactly where you’re spending cash unnecessarily, and where you could save on weekly purchases in the long-term. 

To get started, write down all of your monthly expenses, including coffee, gas for your car, utilities, clothes, food, etc, for a month. Yes, I’m telling you to grab a notebook or journal and write down every single purchase for a whole month. You’d be shocked at how much you purchase in a month, even if you are already very budget contentious.

Then write down your monthly income. See how they match up and cut or scale back on any unnecessary expenses like cable or eating out.

Put the extra into a savings account that collects interest so you have something to fall back on during slow times. Those with the healthiest financial situations can save cash every month – to the point that they’re able to invest some of their wealth in new assets, like stocks or property, too.

Pro tip: Save money on your budget by switching to more affordable utility services. There are many tools online that can help with this. Simply search something like “electricity plans in Houston” to find a tool that will find you the best deal.

Avoid debt collectors and repo men

We’ve all been there. A client fails to pay and an emergency has wiped out your savings. Suddenly you don’t have enough money to pay your bills. This scenario can leave you hopelessly lost – unsure what to do. Whether you’re struggling to pay your rent, your mortgage, or your loan repayments, you need to find ways to avoid debt collectors and the late fees that can rack up, making your debt spiral out of control. Here are some tips for when you fall behind.

If you fall behind on your car payment, call your lender and ask if you can take the missed payment and add it to the end of your loan. Many companies will be happy to do this and it gives you some breathing room.

A lot of companies like banks, utilities and credit card companies will also let you break a missed payment up into chunks. Then, they will add a little to future payments until you’re caught up. This is much easier than trying to pay a missed payment and your current payment at the same time.

When you’re falling behind on student loans, ask for a forbearance. The interest will still build up, but your payment requirements will be paused until you get back on your feet.

By the way, be sure to watch out for illegal debt collecting practices. A lawsuit related to unfair debt practices can take on the debt collectors if they try to process your case wrongly or illegally.

Prevent the famine

Most freelance writers will tell you, you’ll have times of feast and famine. One month you’ll have work flooding in, and then the next month you’ll be sitting around, panicking that your freelance career is over. One of the best ways to prevent those lean months is to pitch consistently. 12 at play keeps the bills at bay! I explain the 12 rule and how to pitch properly here.

Another thing you need to do is to have a backup plan. When it looks like you’re going to have a slow month, don’t just sit around. Contact old clients and see if they need anything written. Work on your blog so that you can have an alternate source of income. Come up with a side-hustle that’s related to what you already do (here are some good side-hustles for writers). Keep the momentum going and you’ll pull through until more clients come along.

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