In 2016, freelancers in the U.S. earned an estimated $1 trillion dollars, as reported by Due. With so much money being exchanged across industries, it is crucial for all freelancers to make an effective plan to best manage their personal finances. One aspect of controlling the flow of your business expenses is through the use of a credit card dedicated to your business expenses. Although there are some who would discourage their use due to the risk of overspending, the responsible use of credit cards can be tremendously beneficial to freelancers in any line of work. Learn more about the four reasons every freelancer should regularly use one specific credit card for their business.
Finance unexpected expenses
CNBC reported in 2018 that 55 million Americans have no emergency savings of any kind. While nearly every adult should have a savings of some kind, it is even more important for all freelancers to be prepared. When working outside of a traditional 9-to-5, not only can unexpected expenses arise (especially with one’s business), but there can often be times when work is light or inconsistent. In addition to having cash in the bank to help you handle these kinds of situations, credit cards can also serve as another layer of financial protection. Having a specific credit card for this purpose can give you added peace of mind, and become a useful tool if you should need it.
Helps separate business and personal expenses
Rather than solely serving as a tool in the event of unexpected expenses, the regular use of a specific credit card for your business has plenty of advantages. One of the biggest benefits that freelancers can reap is easily being able to keep track of business purchases versus personal purchases. When you use multiple cards and accounts to pay for both kinds of expenses, keeping track of business-only payments is extremely challenging. If you haven’t saved every receipt to use for tax and accounting purposes, your only other option is to sort through bank and credit card statements. However, when you streamline your finances by putting every business purchase on one card, your life will instantly be made a lot easier.
Use points toward personal or business expenses
Since it can be expensive to run your freelancing business, it makes sense to earn rewards from your purchases. Currently, some of the biggest card companies are offering promotions such as 1%-5% cash back, reward dollars for various purchases, one-time statement credits of $200 (or more), airline miles, and more. Apply for the card that has rewards that make the most sense for your life. Each time you need to buy something for your business, put it on your chosen credit card, and pay it off immediately. Eventually, you’ll be able to re-invest your rewards into your business, or use for personal needs.
Set up automatic payments through one account
If you are a person who forgets to pay bills on time, or who wants more flexibility in paying for certain monthly fees/bills, a credit card for your freelancing business can assist you in a big way. Set up recurring expenses such as your web hosting and networking group dues on your chosen card. This way, you’ll never have to worry about making your payments on time. Plus, you can pay off your bill when it is most convenient for you.
For all of the reasons listed above, credit cards are extremely helpful for financially responsible freelancers. To find the card option that works best for you, be sure to do your research before applying. Consider factors such as what card providers are accepted by the places you frequent, as well as what rewards are most relevant to your life and business.
