6 Managing Freelance Finances as a Student

Millions of students have jobs at the same time as completing their degree courses, and a growing number are going the freelance route rather than taking on part time roles in existing organizations.

There’s a lot to like about the flexibility that freelancing has to offer students, but it can put you in a financially precarious position if you’re not careful. With that in mind, here’s a look at what it takes to manage your money responsibly if you become an active participant in the gig economy.

Image Source: Microsoft Designer

Budgeting Basics for Freelancing Students

Balancing school and freelancing demands smart budgeting. Here’s how to keep finances in check:

• Track Income and Expenses: Use apps like Mint or YNAB to monitor earnings and spending.
• Prioritize Essentials: Cover tuition, rent, and food first. Allocate remaining funds for leisure or savings.
• Set Monthly Limits: Estimate your average monthly income, then set limits on non-essential spending. Helps prevent over-indulgence.
• Create an Emergency Fund: Start small by aiming for a $500 pot to cover unexpected costs. Put spare cash into this over time to account for unpredictable dilemmas.

Tax Responsibilities and Deductions Explained

Understanding taxes can save you headaches and cash, and with 40% of full-time undergraduates working to support their studies, this applies to a lot of people. To get started:

• Know Your Forms: As a freelancer, you’ll need to file 1099 taxes. Keep all 1099 forms from clients handy.
• Track Deductible Expenses: Office supplies, software subscriptions, and even part of your rent if you have a home office—these can lower your taxable income.
• Set Aside Money for Taxes: Save about 25-30% of each payment for quarterly tax payments.
• Use Tax Software or Hire an Accountant: Tools like TurboTax Self-Employed make filing easier. If you want to go a step further, accountants provide personalized advice.

Strategies for Wrangling Irregular Income

Freelance earnings can fluctuate, but smart management will keep you stable. Now that 38% of people work on a freelance basis, these skills will put you in a strong position if you decide to stick with this path post-graduation. There are a few standard strats to adopt:

• Build a Buffer: Aim to save enough to cover 3-6 months of expenses. This cushion absorbs income dips – and should be kept separate from your aforementioned emergency fund, which is more about handling one-off expenses.
• Separate Business and Personal Finances: Use different bank accounts for freelancing funds and personal use. This helps track cash flow clearly.
• Pay Yourself a Salary: Decide on a monthly amount to transfer from your business account. It’s a way of simulating steady income, as well as practicing moderation in terms of spending.
• Plan Ahead for Lean Periods: Identify months where your earnings dip because gigs become more scarce, and ramp up savings during busier times to make up for this.

Setting Financial Goals

Establishing clear financial goals drives professional progress and contributes towards financial stability in one fell swoop. Here’s how to set them for yourself:

• Define Short-Term Goals: These could be saving for textbooks, paying off small debts, or funding weekend trips. Doing this motivates you to work at your freelance gig with enthusiasm, rather than seeing it as a chore.
• Set Mid-Term Targets: Aim to save for bigger expenses like tuition next semester or upgrading your laptop. This bridges the gap between immediate needs and long-term dreams. It also gives you a way of avoiding becoming part of the 60% of adults who have no savings whatsoever.
• Plan Long-Term Objectives: Think beyond graduation, and start saving for a post-college move, starting a business, or even early investments. This aligns your daily efforts with your future ambitions.
• Break Down Big Goals into Steps: Saving $1,000 might feel overwhelming, so splitting it into $100 chunks makes it manageable. For instance, if your goal is saving $600 in six months, set aside $100 monthly.
• Review and Adjust Regularly: Life changes, and so should your goals. Revisit them every few months to stay on track.

WhatsApp Business API: Simplifying Freelance Client Management for Students

For student freelancers, managing multiple clients and projects can be overwhelming. The WhatsApp Business API offers an efficient solution to streamline communication, allowing freelancers to automate invoicing, send payment reminders, and provide real-time project updates to clients. With features like automated messages and quick replies, students can focus on delivering quality work while maintaining professional client interactions.

Wrapping Up

Basically, you can’t afford to go into the world of freelance work without properly planning for how this will impact your finances, particularly if you’re still studying at college or university. With a handle on budgeting and tax responsibilities, as well as workarounds for future instability and solid goals underpinning your decisions, you can push ahead with confidence.