The economy is always bad, no matter how hard you work or how much you make. If you still work, it always feels like you are not in control of your financial well being. This is a particularly sensitive issue for work at home entrepreneurs and freelancers who only get paid for the effort they put in their work unlike most 9 to 5 employees who are guaranteed a pay slip at the end of the month even when they sleep on the job. There are a few things you need to consider though to improve your financial security as a work at home entrepreneur and to be in better control of your financial future. Here are the 5 top tips you need to put in practice.
a) You must have an emergency fund
As soon as you get started with your work at home business or job, on top of your to-do lists should be the creation of a special emergency fund. This ensures that you have some money set aside for a rainy day when finances will be short or for the times when if for some reason you cannot work or cannot get your cash. You should set aside about three months’ pay equivalent as emergency fund that you can only access when there is a genuine emergency.
b) Be in control of your cash flow
Unless you make more money than you spend, you risk bankrupting your business or failing to pay your bills. Most online businesses and jobs will pay you your worth, if you approach the work at home idea the right way. Managing your cash flow involves making budgets, taking on jobs that are rewarding and making healthy financial decisions.
c) Have a retirement plan
It is never too early to have a retirement plan. Even if you are in your early twenties, you need to have a plan for your future. This may involve regular contribution to a retirement benefits organization or getting a life insurance as a long term savings plan. When working at home and earning per project, it is very easy to overlook the significance of long-term savings.
d) Keep expenditure to the minimum
Just because you make more than you need to live comfortably from your work at home job or business does not mean you go on a spending spree every time the check comes in. Keeping your expenditure to the minimum, especially in those things you can do without like hiring an office space or a second car. Instead of throwing money away, you can buy stocks or consider another form of long term risk-free investment.
e) Learn to cope with earnings fluctuations
As a work at home entrepreneur, chances are that your earnings will be irregular. This means that normal budget rules may not work too well for you as earnings come in troughs and perks. What you need to do is cope with such a situation by having cash at hand to cushion you from low earnings eventuality. Note that this is different from your emergency kit.