Financial planning for digital entrepreneurs

Ximena Díaz de la Serna G.

May, 31, 2023

3 min. reading

If you have joined the freelance world and receive money from abroad, it is important that you have certain tools at hand to be able to keep a good control of your time and resources, thus achieving the objectives set, free of stress and conflicts.

One of the most important things you must have in order are your finances, since you will be carrying out several projects at the same time, with which we know you will generate extra income. Remember that with this scheme of work, no one pays your taxes for you, much less for your social security.

With personal financial planning you can account well for all your monthly income, since payments are generally not made all at the same time. Therefore, if you don’t have a defined organization about the money you are earning, you will most likely make expenses that unbalance your finances.

What is a financial planning?

Financial planning is the scheme you adapt so that your money earned from a job, be it a temporary contract, fixed salary, commissions, bonuses or other external income, has a healthy state; that is, so that it always stays between the positive and effective range.

You have to handle all the financial aspects directly; you don’t have a human resources or administrative department to take care of your savings, benefits and vacation or year-end bonuses, so consider that your planning should have the following characteristics:

• Order: delimits expenses as primary personal expenses, financial commitments with third parties or service companies, entertainment outflows, interim expenses and the approximate amount to be saved monthly by adding net earnings.
• Personalized: financial planning follows universal parameters within the economic world, but undoubtedly it is a plan that fits your reality, because your life is very different from that of your neighbor, another relative or friend. Of course this planning pursues similar goals for everyone, which is nothing more than a successful market performance; however, it merits unique perspectives.
• Open and available: this process will always be tied to your needs as a human being; besides, you can invest in it the time that makes you happy or convenient and you set purposes, dates and the achievements that you should or need to reach. There is no rigidity that you must maintain, but keep in mind that the more you stick to your own financial rules the easier it will be to obtain the desired benefits.

We invite you to read about the tools a freelancer needs to be competitive and start off on the right foot.

Strategies to develop financial planning

You will need to consider a series of steps and strategies in order to meet your objectives when receiving international payments for your work. Some of the elements that are included in a typical personal financial plan are:

1. Establish financial objectives: This involves identifying short, medium and long-term savings, investment and expenditure objectives.

2. Evaluate the current financial situation: It is important to know how much money you earn, how much you spend and how much you owe in order to make informed decisions about how to manage your money. This is extremely important as you will have cash coming in from various projects, which can fluctuate month to month.

3. Develop a budget: This involves tracking monthly income and expenses to monitor spending and ensure that financial goals are being met. There are mobile apps that help you organize these metrics from your cell phone or computer, such as Monefy or Budgeting Buddy, to do it without so much effort. The important thing is that you check and be clear about each process.

4. Save for emergencies: It is important to have an emergency fund to be prepared for unexpected situations that require significant expenses.

5. Investing for the future: There are different ways to invest your money, from time deposits to investments in stocks, bonds or mutual funds. It’s important to consider your goals and investment profile before deciding where to put your money.  It is an important part of this process, as it allows you to put your money to work to generate more income and increase your wealth

6. Manage debt: It is important to manage debt effectively to avoid excessive financial burdens and improve long-term financial health, as the goal is to not have this consume you without realizing it.

7. Planning for retirement: It is important to plan ahead for retirement and make informed decisions about how to invest and save for future peace of mind.

8. Preparing for taxes: This means that you will need to set aside a portion of your income to pay your taxes, and keep a detailed record of your work-related expenses so that you can deduct them on your tax return.

9. Hire an accountant: If your finances as a freelancer become too complex, it may be a good idea to consider hiring an accountant to help you with your planning and tax management.

Assuming a healthy financial education or behavior is the best advice we can give you from Airtm, where you can easily receive your payments from abroad and move your money according to the strategies you contemplate.

Being a digital entrepreneur or dabbling in the freelance world is not a simple fashion, it is a concrete personal decision. It is an open space for you, do not be afraid, take the necessary risks, but always keep an organized idea in your mind. And remember that in us you have the best business ally to save and diversify your earned money.

Airtm is the world’s most connected digital dollar account, with over 400 payment methods to move your money, no matter where you are, giving you financial freedom. Open your account now.

*This article doesn’t constitute financial advice