5 ways freelancers can increase cash flow while their income is down

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  • Many freelancers have taken a financial hit since the start of the pandemic, and most government relief has run out.
  • If you need to increase your cash flow to save or pay bills, financial planner Ben Henry-Moreland recommends looking first at your spending to see where you can cut back.
  • Then, look into any government programs that are still available, such as the EIDL, and consider reducing your health insurance costs if you’re able.
  • You can also reach out to your network to get more work, and reduce your quarterly tax payments to the IRS if your income has gone down.
  • Get Personal Finance Insider’s free guide to financial planners »

If you’re a freelancer like I am, you know just how hard it can be to manage your money. For one thing, budgeting on an inconsistent income is like taming a beast in the wild. And  trying to save? That can feel like a lofty aspiration to spot Big Foot. Take into account the financial curveball that the pandemic has thrown at us, and it makes saving that much more challenging.

Now that some of the government-funded programs made available to self-employed folks because of COVID-19, namely the Paycheck Protection Program and expanded unemployment benefits, have lapsed, freelancers might feel even more squeezed financially. So how can you save — or even just meet your basic financial needs — despite all these hurdles?

Ben Henry-Moreland, a financial planner and founder of Freelance Financial Planning, has some advice.

Focus on your spending 

The only way to manage inconsistent income is to keep a relatively consistent level of spending that allows you to build up enough of a cushion during the good months to get you through the bad ones, explains Henry-Moreland. 

“Know what you’re spending money on, where you can reduce expenses if necessary, and what you need at a bare minimum to keep you going every month,” he says.

Make adjustments to your estimated tax payments 

Another way you can free up some cash to put toward savings is to lower how much you pay Uncle Sam for your quarterly estimated tax payments. “Freelancers whose income has dropped this year can — and should — make adjustments to their estimated tax payments,” says Henry-Moreland.

Your estimated tax payments are typically based on how much you earned last year. So it makes sense that if you are making less in 2020, you can lower your payments to the IRS.

Do you have any clients who issue you a W-2? If so, you can reduce your withholding for a fatter paycheck, says Henry-Moreland. That way, you might have a little more to send from your paycheck to your savings or bills.

Look into reducing your health insurance premiums 

Bumping down health insurance costs could mean more money in your savings account. If you bought a health insurance policy on the Health Insurance Marketplace, then you’re out of luck. You’ll need to wait until open enrollment, which starts November 1, before you can make any changes to your plan.

However, if you bought your policy off the Marketplace, or if you’re eligible for a special enrollment period, then you might be able to make changes to your plan to lower your monthly premium, says Henry-Moreland. For instance, you might hop on a different plan that has a lower premium but a higher deductible or copayments.

Be in the know about government relief that’s available 

While the deadline to apply for the Payment Protection Program ended on August 8, other relief from the government is still available. 

The Economic Injury Disaster Loan program is still active, and while funding for the $1,000 advance has been depleted, you can still apply for a loan. If your freelancing business has been economically impacted by COVID-19, then you’re eligible for a loan. Administered by the Small Business Association, the EIDL offers a 30-year term, and an APR of 3.75% for businesses and 2.75% for nonprofits.

Reach out to your network 

Just because you’re an independent worker certainly doesn’t mean you have to make a go of running a freelance business on your own. Henry-Moreland recommends keeping a mental inventory of your support network. 

For instance, consider leaning on your tribe to help you earn more by way of job leads, client referrals, or tips on how to pivot in the COVID economy and boost your earning potential.  

“A lot of resources kind of depend on the individual,” says Henry-Moreland. “Everyone has a different support network based on their family, friends, career field, location, and so forth.”

Start by making a list of friends, family, and colleagues you can turn to for work opportunities. By looking for more job opportunities and earning more money, you can use that to put toward your savings. 

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