Q and A Recap: Financial Planning for Freelancers

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Freelancing can be an extremely lucrative career path. In an ideal world, you will have a steady stream of clients and payments would be delivered on time. And financial security wouldn’t be a major concern for freelancers.

But things may not always turn out the way you plan it to be. There may be dry spells, unexpected emergencies, unbudgeted expenses, among other things. That’s why financial planning is so crucial for freelancers.

We recently hosted a Q&A session with Finance Expert Samant Sikka to shed more light on how you can manage your money better as a freelancer.

About Samant

Samant is the co-founder of Sqrrl Fintech, a digital personal finance platform aimed at making savings and investments delightful for young Indians. His vision is to make a difference in the way Indians save and invest.

He has a Masters degree from the Indian Institute for Planning and Management. He has more than two decades of experience in the industry, working for the likes of Franklin Templeton Investments, AIG Global Investments, and Axis Asset Management before founding his own company.

Here is the full video of the Q and A:

Tips for Money Management

Taxation for freelancers

  • Profits and gains from businesses or professions are looked at similarly, from an income tax point of view.
  • As a freelancer, you have an advantage – deductions. You can deduct your rent, travel costs and more as business expenses.
  • You can save tax as a freelancer. All tax breaks (such as Section 80 C) are available to you.

Read more on taxation for freelancers here.

Getting loans as a freelancer

  • When applying for a loan, the bank’s first step is an assessment of your finances, where you have to show your income. Salaried professionals pull out their salary slips which freelancers do not usually have.
  • Freelancers can show an income by taking the tiny step of segregating their personal and professional expenses.
  • From your overall income for the month, pay yourself a fixed salary that pays for all your needs (rent, utility bills, etc.). If you can show your money inflows and outflows in a structured, organised manner, banks will not hesitate to give you a loan.

Useful Finance/Money Management Apps

  • Sqrrl helps people improve their relationship with money by assisting them in saving, planning for their taxes, and planning for their goals.
  • With the Sqrrl Away feature, you can set-up automatic savings every time you make a payment online. Basically, while you spend your money, Sqrrl away works hard simultaneously to create a savings pool for you.
  • The Sqrrl app also has an Axe Tax option which helps you invest money in tax saver funds.

For more information on Sqrrl and how you can save and invest with the app, click here.

Investment planning for freelancers

  • Set up an emergency fund. Start building six months of your expenses as a lump sum.
  • Build buckets of investment for the goals that are important to you. If you want to save for a car, a house, kids’ education – consider each one as a goal and start investing in each.
  • Mutual funds are a great option. They are safe, easy to invest in and pull out of, excellent for diversification, and tax-efficient.

Investing in your mid-20s

  • 100 minus your age should be your exposure in equity; the rest should be in fixed income. For instance, if you’re in your 20s, 80% of your disposable savings should go into equity markets. 20% should go into fixed income.
  • As your age increases, your exposure to equities should start to come down. It is a great way to balance your portfolio in line with your age.

Wrapping Up

We, at TapChief, are grateful for the incredible participation and response we received for the Q&A session.

A massive thank you to Samant for being a part of our Facebook Live Webinar, for discussing all the questions that were asked at length and providing so much value to all our community members.

The next TapChief Q&A will happen soon, watch this space for updates.

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Karthika Anand

Karthika is a Content Creator and Community Manager at TapChief. When not found writing, she's most likely to be found at the gym.