This is a sponsored resource from Joust, the first financial services company animated by and focused on the unique needs of freelancers. What if your bank admired your passion and respected your work? And what if it could guarantee you got paid? PayArmour, a revolutionary new solution from Joust, takes the hassle out of invoicing clients and protects you against client nonpayment.

There’s probably a list in the back of your head of things you know you should do to get your finances in order. How are we going to make those happen? Let’s break it down, get a game plan, and walk you through it.

Measure and get a baseline of your finances

Start with a few big numbers. See where you stand. Don’t judge yet, this is the start of the process for improving your freelance financial health. We’re getting a baseline. For the last full month calculate:

• Gross revenue
• Business expenses
• Net Income (easy one, revenue minus expenses)
• Household expenses (or the proportion of what you’re responsible for in your family)

Shining the light of day on financial issues can be uncomfortable for some of us—OK, make that a lot of us. Good for you for taking the first step.

Analyze what you’ve got so you know where you’re going

Now that you have those big-picture numbers, assess what’s happening. The basics:

• Is your net income a positive number?
• Is your net income larger than your household expenses?

Last month’s revenue may have been low because you were on vacation or because you’re still launching your freelance practice. Add a time variable to your calculations: measure up the prior month(s) and measure again at the end of this month.

• What’s the trend for these monthly numbers?

If you can’t see an obvious trend that’s OK: freelance revenue is notoriously volatile! Digging deeper:

• How big are those revenue swings?
• Is the volatility more about when you get work or more about when you actually get paid? Joust’s PayArmour can help with the getting paid part.

If the numbers look alright, congratulations! Next, we can make sure you’re set up for the long haul. If the numbers worry you, hang in there. We can figure this out.

Make a plan of attack

Let’s make the safe assumption that you could probably improve your financial situation by driving down some expenses and/or driving up your revenue. Tackle at least one of those three big numbers. Or take them all on, in any order.

Business growth

If you are just getting started or your revenue is lagging, this is an obvious choice. Even the well-established freelance professional may want to review these variables periodically:

• Overall market for your business
• Prospective clients currently in your pipeline
• How much time you have
• How much you charge

If the market is strong, but your pipeline is low, focus more on the business development tasks. Spend some time on LinkedIn, invite a contact out for coffee, or increase your Google Ad spend. Get out there.

If your pipeline is strong, but your time is limited, try raising your rates and see what happens. Perhaps try the higher rate out on a new client, to see what the market will bear, before renegotiating with a steady client.

Some of us choose freelancing because we don’t have the bandwidth for a full-time position. Consider a few sub-variables that could affect your billable hours:

• Tasks you could farm out
• Tech tools that could free you up
• Family life changes (e.g. shifting responsibilities with one’s spouse or offspring)
• The amount of attention and energy you might have to match an increase in hours

Personal/household expenses

Budgeting is a huge topic, with plenty of books, apps, and advice of varying quality. There’s a “personal fit” issue with these — we’re all wired a bit differently. The important part: engage with something that will track your actual spending against your intentions.

A light lift: Does your current bank account have any built-in personal financial management tools? (This is where Joust’s Savings Goals can help!) Give those a shot and see if they’re helpful. If that doesn’t make a difference, try something else. Features you want to look for in budgeting tech tools:

• Savings goals. Set aside funds for when you finally take that much-needed vacation, as a safety net, or simply for any future big purchases.
• Centralized bill pay feature. Have all your bills in one spot for easy management.
• Invoice management. Similar to your the billing feature, manage your outgoing invoices and incoming pay.
• Payment protection. We all know client late- and non-payment is a big issue, so make sure you have something that helps protect your freelance finance needs.

At Joust, we designed our banking platform to have all of these.

Business Expenses

The complexity of your business expenses will vary depending on your line of work. Your numbers are probably in decent order because you’ve had to tally them up to file your taxes. Consider how you fit among these three accounting archetypes:

• The minimalist. You don’t have a lot of overhead. You tally up the basics when there’s a tax reporting deadline. There’s not much to look at here.
• The dynamist . You need to pay attention. There’s either a high number of types of expenses, a high volume, or both. You need the technology, and the odds are high that you can find an expense to cut back.
• The formalist. Your time is better spent farming this out to a CPA or a skilled, trusted family member. Since you’ve been keeping the accounting at a distance, you might need to build in a periodic expense review.

Is your current tracking process working for you? If your business growth efforts are going well, you may need to move to a more involved or formal approach to keep a handle on business expenses.

Organize & account

In a perfect world, you would start here and do everything the right way from the get-go. More likely, the first three steps have made you appreciate the need for better accounting and business structures. And hopefully, you’ve built up some financial management momentum. Time to get serious.

Start thinking of yourself as a small business owner with a staff of one. (We like the term “solopreneur.”) Here are some structural steps to take now, if you haven’t already:

1. Open a separate bank account for your business.
2. Separate your business debit/credit cards from your personal cards.
3. Set aside funds for tax payments.
4. Establish a consistent billing process that includes an invoicing template or tool and a method to track them. You could make this easy and certain with Joust’s PayArmour invoicing tool and payment guarantee.
5. Further separate your work from your personal life by organizing as a business entity (e.g. an LLC), with a more favorable tax structure and protections for your personal assets.

Buffer & build

Congratulations, you’ve just hired yourself as the head of HR! You’re now in charge of designing your ideal benefits package — and you have the control to make it a good one that encompasses more than just health insurance (which warrants a whole other guide). Here are the basics for your freelance financial security:

• Short-term savings. Everyone needs this cushion. Freelancers really need it. The conventional wisdom of quick access to funds that would cover three months of operational expenses and income is a nice idea. If that seems daunting, set a more reachable goal: how about just one month? The easiest way to do this is a “set it and forget it” approach. When you were separating your business and personal accounts you got familiar with various features, e.g. rounding up purchases and putting the change in your savings account. Make sure those are turned on.
• Long-term savings. Freelancers of all ages need this. Older freelancers really need it. While you’re setting up your short-term savings figure out how to automate contributions to a retirement savings vehicle (e.g. IRA). Maxing out the annual contribution limit is a good goal, see how close you can get to that. Even if purchasing a residence is a more timely priority for you, look into the possibility of borrowing against retirement funds for a down payment. How exactly you should invest these savings is another realm with tons of advice and varying philosophies. But saving for retirement is sort of like eating vegetables; almost everyone agrees on it — you’ve just gotta find a convenient and palatable way to make it happen.
• Insurance policies. Disability is the key policy you may be missing. It’s the quintessential benefit package item that’s easy to overlook. Trust us, it’s not a fringe perk, it’s essential. Get something comprehensive that will cover long and short term. We’re going to end here and let you do that right now!