Money anxiety is one of the biggest stressors freelancers face. With the unpredictable nature of freelancing – including its feast and famine cycles – it’s no wonder money fears are prevalent.
Numerous recent surveys have found that money is the biggest source of stress for Americans. For example, a survey by Northwestern Mutual discovered money stress was more of an issue for people than relationship stress and work stress.
Another survey from 2018, by the American Psychological Association, found that 81% of Gen Z participants were significantly stressed by money. Interesting, money beat out health, work, and relationships as the top stress factor.
And so, if you’re a freelancer with money anxiety, you’re certainly not alone with your fears. But this is small comfort if you’re struggling financially and worried about the future. Freelancing is often held up by marketing gurus as a way to make a 6-figure income, on your own terms, but the reality, at least for the first few years can be something entirely different.
Ways to reduce your freelancing money anxiety
So what are some of the ways you can reduce your money anxiety? Whether you’re fresh out of college or a seasoned freelance pro, here are just 7 ways to lesson your monetary fears as you build your freelance career.
- Create client retainer agreements
A great way to escape the feast and famine cycle common to freelancers is to develop a number of client retainer agreements. Retainers are ideal for freelancers who want the safety of a regular employee-style income while also working long-term with the same clients.
A retainer contract ensures you receive a steady monthly income thereby boosting your cash flow and soothing money anxiety. You will also be able to work faster due to client project familiarity and increase your workflow as a result. This means more billable hours freed up for even more client work – or leisure time.
- Raise your rates
There’s no two ways about it. To be a successful freelancer with fewer money worries, you need to raise your freelancing rates. Regardless of your industry and services, it’s likely you can charge more than you currently do, especially if you’re a newbie freelancer.
However, simply raising your rates can meet with pushback from your prospective clients, unless you develop your brand and marketing to match. How prospects perceive you is vital when it comes to charging more, and it’s not always to do with how talented you are.
Less skilled freelancers who are imbued with self-confidence and marketing moxie can often access higher fees than their less confident but more skilled peers. Perception is everything.
- Create service packages
Another way to raise your rates and for your services to be perceived as a bargain is by creating service packages. This is where you productize your freelance services and offer a selection of tasks or skills as an all-in-one solution. This pricing strategy can be scaled up depending on the number of items you add.
Service packages make things simpler for both you and your clients. The prospective client sees everything laid out in full and knows exactly what they’ll get for the attached price. For you as the freelancer, there’s less explaining to do with each new client and the packages are easier to quickly order.
- Diversify your income streams
Freelancing can make you a lot of money, when done right. There’s every reason for a good freelancing career to ease money anxieties considerably. That said, freelancing is very much time-based. It doesn’t really scale. Once you work for an hour, you don’t get that hour back. And if you don’t work, due to illness or technical problems, then you don’t earn.
That’s why diversifying your income into different streams is a sensible way to ease money anxiety, especially in the future. For freelancers, such streams might include: product development (such as courses or eBooks), coaching or consulting, affiliate marketing, podcasting (attracting sponsors and ads); and even setting up your own agency.
- Make saving a priority
A big pot of savings is essential for freelance wellbeing. Freelancing, especially in the early years, can be decidedly up and down when it comes to workflow and cash flow. One month you might be working with numerous well-paying clients, and a few months later, twiddling your thumbs wondering where the next project is coming from.
Savings not only allow you to weather short-term peaks and troughs but are also essential for your long-term financial security, including when it comes to health and retirement.
Set up a savings account – perhaps more than one – in which you put a percentage of your monthly earnings. Consider also a separate emergency account for unexpected illnesses and accidents, where you might be unable to work for a few weeks.
- Take care of your taxes
Taxes are enough to send a shiver down any solo professionals spine but they are necessary. Filling in your own tax return can seem like a marathon of tedium, confusion, and even anxiety but with careful planning throughout the year, it needn’t be a big deal at all.
Use bookkeeping software to record all your income and expenses, and to calculate estimated taxes. Research what you’ll need to pay depending on the type of business you run. Plus, claim all expenses related to your freelancing work, such as software, hardware, and work travel.
You don’t need to pay more tax than you need to.
- Use the best online software
Modern technology is a freelancer’s best friend, and this is particularly the case with cloud-based software. You no longer need to keep all your data solely on your computer in fiddly documents and files. With free cloud invoicing, bookkeeping, and project management software, you can speed up your admin and workflow tremendously.
Using Invoice Ninja, you can send invoices, track all income and expenses, synchronize your data across multiple platforms, manage numerous client projects, time track your billable hours, and so much more. Everything is all in one place and automatically recorded, which in itself reduces many anxieties associated with money and time.
Getting rid of money anxiety for good
Money anxiety is common and it’s horrible. Yet it’s entirely avoidable with careful planning, intelligent research, sensible financial habits, and a will to succeed in your freelancing career.
When you have all these facets in place, together with great online software and a self-belief to charge what you’re truly worth, then money anxiety really won’t have a leg to stand on.