Protect Your Freelance Finances: Avoid Impulse Buying
Financial management is more important for freelancers, because they sometimes don’t know when the next paycheck will arrive. They should have better control over their money.
A notable financial pitfall is impulse buying, which represents short-term thinking at its worst. It may make you feel good right now, but guilt and unnecessary stress follows eventually.
Continue to read about the four questions I always ask myself when considering a purchase It has helped me avoid impulse buying, and gives me better control over my money.
- Do You Really Need it? This is a question that many people surprisingly fail to ask themselves when considering a purchase. True, they do believe that they need it, but the need may not be as important as it seems. A freelance photographer needs certain equipment to be able to do better work, but does a freelance writer need a top-of-the-line (read: more expensive) laptop?
- Can You Really Pay For it? This is a particularly important question for credit card holders. Aside from keeping your total debt below the amount of money you have in the bank, you should never take on loans that require you to pay more than 20% of your estimated monthly income.
- Will You Really Use it? So you’ve spent some money on those pair of shoes. A week later you regret buying it, because you can’t seem to fit it in your wardrobe and it’s suddenly out of style. Congratulations! You’ve spent for something you won’t use!
- Can You Find a Lower Price? Once upon a time, finding a lower price meant spending more time shopping. With the internet, finding the lowest price for a product is a simple matter of using Google and visiting popular forums. A friend recently spent $600 for a camera on a whim. He didn’t look around, which is why he missed out an online retailer that sold the same gadget for $345.
The trick to making these questions work is to force yourself to ask them whenever you consider any purchase. Slow down, stop, and analyze. You’ll find that after a bit of thinking, many of your dream items suddenly lose their appeal.
To be clear, I’m not saying that we shouldn’t enjoy ourselves. Nor should we aspire to fulfill our own dreams. There is nothing wrong with using our hard-earned money satisfy our wants and desires. But we should always do so in terms that are good for our own sake. The adage “live within in your means” has been around for quite a long time. It would do you well to follow such timeless advice.
For more you advice on personal financial management, visit Get Rich Slowly.
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