Just like any other online entrepreneur, bloggers need to be aware of their finances to be successful. This is true even if your primarily freelance: in that case, your business is simply yourself. A strong financial plan is an important component of succeeding as an independent business person. Whether your just getting started or you’ve been at it for a while, you can follow these smart finance tips for bloggers to make sure you’re on top of your game.
1. Account for taxes
The first of our finance tips for bloggers might seem blindingly obviously, but if you’ve never worked as a freelance professional, you might not be prepared for the reality of calculating your own taxes. In the United States, freelancers are commonly classed as independent contractors for tax purposes, meaning that you’ll get no tax withheld from your paychecks. While this means more money in your bank account, it doesn’t mean you’re off the hook come tax season. You’ll still need to pay your share, but you have to figure out what that share is. And you can say goodbye to refund!
In order to calculate your annual tax burden, you’ll need to track your expenses and income in detail. Fortunately, there’s plenty of tools that can help with this. Check out QuickBooks Self-Employed: the app tracks your income and expenses automatically, calculates your quarterly tax bill and helps you make quarterly payments towards your income tax. If you’re a freelancer, software like this is a must-have.
Running a blog with writers and staff is a whole different story. If that’s your situation, don’t get your tax advice from blog posts. Hook up with an expert accountant to make sure you’ve got all your basis covered when it comes to tax season.
2. Create an emergency fund
For writers that are just starting out, this might seem like a funny tip. If you’ve only got just enough money coming in to cover the basics, the idea of saving or investing does seem truly comical. But if you’re successful, you’ll need to start managing your money intelligently.
There’s different schools of thought for managing a surplus. How you deal with extra money is determined by your temperament, but everyone can and should save at least a portion of their surplus cash in an emergency fund. This money should be saved in the most secure financial instrument available to you: a savings account. The idea is to keep the money readily accessible but secure. You might earn a comically small interest rate, but an emergency fund isn’t for investment. It’s to protect you in case of a sudden disaster or a rare dry spell.
It might be tempting to invest your emergency fund and earn some interest, but avoid this. Every investment carries risk, and it’s completely possible that when you need the money, it might have lost a major part of its value. Also, pulling money out of the market because you suddenly need to spend it isn’t a good investment strategy. Stay boring on this score. If you ever need the money, you’ll be grateful.
3. Invest when possible
As an entrepreneur, you need to be responsible for your financial future as well as your present. You can’t rely on a matching 401 (k) or pension to pay for your retirement. If you want money for retirement, you need to put it away yourself. If you live in the U.S., you’ll probably get some form of Social Security after your retirement date, but you shouldn’t rely on that alone. Start investing in a IRA with a maturation date targeted for the time you expect to retire. These accounts will start out with a fairly risky mix of stocks, and then gradually rebalance to become more conservative as you approach retirement. Vanguard and Betterment both offer accounts like this.
If you’re doing especially well, you might decide to invest some money in the stock market. There’s the potential for large gains, especially if you can stomach the risk and know a little bit about financial markets, but it’s far easier to lose your shirt. If you’re going to invest yourself, you can use a forex web trading platform to watch markets and make moves. Just don’t risk more money than you’re comfortable losing.
Conclusion: Be flexible
Being a blogger is hard work, and it can be hard to get your business off the ground. If you’re just starting out, don’t be afraid to start writing as a side gig while your business grows. Explore freelance marketplaces and look for opportunities to monetize your skills and expertise wherever you can.