I use Mercury as my business banking solution and implemented Profit First automated transfers. Most business owners calculate profit at the end of the fiscal year, after paying expenses. It's easy to consume all your cash, leaving nothing left for profits. That's why I love the Profit First approach, which led me to setting up automations to allocate cash for operating expenses, owner's compensation, taxes, and profits. Mercury's auto-transfer rules feature makes Profit First a breeze to implement.
I remember when I transitioned into freelancing, pre-spectup days, and it felt a bit like stepping onto a financial tightrope without a safety net. One piece of advice I always share with freelancers is to get familiar with cash flow management-it's your best friend. I used to track income and expenses rigorously, initially on good old spreadsheets. Soon enough, I discovered the magic of tools like QuickBooks and FreshBooks. They not only streamlined the process but also provided insights into where money was coming and going. It's like having a crystal ball for your finances but without the mystic mumbo jumbo. Another practice I'd recommend is setting aside a portion of each payment for taxes right away-think of it as a built-in safety buffer when tax season rolls around. You don't want Uncle Sam knocking on your door uninvited. Prioritize building an emergency fund to cushion those months when work might be slower; it helps keep the stress levels down. Treat your freelancing like running a business, and soon enough, you'll find the balance between financial freedom and stability.
As a freelancer, you'll have months where you make a lot more than you expect. During these months, save some reserve cash. Because sooner or later, you'll have a bad month and you'll be unprepared for it. If you focus on setting money aside for a rainy day, you'll be able to keep freelancing and won't have to return to work.