A countless number of today’s career paths offer the luxury of working from home on freelance-basis. Whilst the idea of being your own boss is undoubtedly appealing, it often comes with a degree of financial uncertainty – especially when earning an irregular income. Whether you are specializing in a career which varies in workload (such as those working contractually) or a job where even small variables in performance can affect your earnings (such as when working on commission) – there are some things you can keep in mind to relieve the stress of uncertainty whilst maximizing your potential earnings. Below are a few points to consider if predicting your monthly income is no easy task…
Consider Your Readiness
If you’re choosing a career whereby earnings can vary drastically from month to month, you need to be sure that you are truly up for the challenge – both emotionally and financially. First, determine whether you think you are truly capable of coping with the potential stress of uncertainty, and whether you are prepared to be as adaptive and flexible as will be required.
Calculate your most basic living costs to be sure that you can comfortably cover your monthly essentials on your minimum possible income. Secondly, do your research on what it is really like to be self-employed – can you adapt to the lifestyle?
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Consider Your Safety Net
Part of being ready for a job with an irregular income is having a safety net. Do you have a support network that you can fall back upon, should you ever go through a period of financial struggle? A support network can be anything from backup savings, to a partner who is willing to financially support you while you get on your feet.
Whatever your network of support, you will be better for having one when you are going through a period of income uncertainty. This kind of support is equally important for your emotional health. Having someone in your life who can motivate and inspire you will make your lifestyle transition easier.
Save, Save, Save
It’s tempting, when finally receiving a fat cheque after a dry spell, to go on a spending spree – such as professional gamblers are notorious for doing. Instead of practicing responsible finance and putting aside winnings for the potentiality of future financial hardships, gamblers have a reputation of blowing their earnings in a small amount of time only to find themselves back where they started.
Professional poker players who prevail within the industry are those who have a good hand of their bankroll management and resist the temptation to spend all winnings at once. Whenever you earn or win money – always consider how much of it you can put aside as savings.
Consider a Side Job
Ultimately, it never harms to play it safe. Whilst throwing yourself into the unknown might seem like the best way to adapt as quickly as possible, don’t discard the possibility of taking up a weekend job in the early days of your transition into commission-based earnings.
A supplementary income, however small, will go a long way in easing the mind. Of course, the downside is that it results in an extra workload and might deduct time you would otherwise spend on focusing your real career goals.
Know Your Worth
Now that we’ve considered the support network you can establish before embarking on a freelance, commission- or performance-based salary, it’s time to look at how we can minimize the likelihood of ever having to fall back on that safety net. Do your research!
Be up-to-date on your industry’s trends, employment laws along with the average earnings of people in your field. Are you charging a reasonable rate for your services?
Should you negotiate a basic income on top of your performance-based bonus? What are other people in your field earning? Be business-savvy, and don’t let clients or employers take advantage of you!
Use Effective Tools
Personalized and detailed budgeting templates will help you track your income and control your spending. Smart budgeting and general organization are key to reducing stress on an irregular income. Record-keeping will also help you detect trends and patterns in your income over a longer period of time.
Does your income consistency dip at certain points in the year? How can you counter-balance this? Which months are most lucrative and why?
Set Goals for Yourself
Closely related to knowing your worth is knowing what to expect – both of yourself and of your employers. Set realistic goals for yourself so that you can continuously work toward – don’t settle for what is merely ‘comfortable’.
Instead, utilize all your spare time in figuring out how to improve your performance, manage time more efficiently, build a bigger client base, increase your income and advance your career. Where do you want to be one year from now? What about five years?
Having ambitious yet realistic goals will help you avoid hitting a stand-still, where you are unable to progress. This is especially important when you run the risk of focusing solely on achieving a set income, and not enough on actual skills progression.
Don’t Get Unmotivated
It can take a long time to stabilize an irregular income – depending on your work, you might never be able to depend on a definite weekly or monthly revenue. On top of that – it can take just as long to get used to being your own boss.
For many people, the freedom of flexibility offered by self-employment is well worth the initial struggle, so don’t got unmotivated by the challenges along the way. Building a client base from scratch, or learning how to consistently reach performance-based goals, can take time. A clear plan, careful budgeting and optimistic attitude will go a long way in helping you achieve your dreams of self-employment.