Losing their job due to COVID-19 is a bad situation for salaried people. But it is worse for freelancers. Mumbai-based Vishal Desai, 30, worked as a freelance cinematographer who took up video shooting assignments for movies and advertisement commercials. All the assignments got cancelled indefinitely as the country went into lockdown from March 25. Even a compensation of Rs 3 lakh from his previous assignments has been stuck. “Last two months were rough. These days, I am largely reliant upon my savings and struggling to pay recurring utility bills,” he lamented over a phone call. He is not hopeful of resuming his assignments until the end of this year.
Vishal’s case is not unique. In a global survey of 1,000 freelancers published in May 2020, Payoneer a cross-border payment platform connecting freelancers and companies found that 32 percent of freelancers experienced a decrease in demand for their services during the pandemic.
The report further stated that, at present, in India 75 per cent of the freelancers are millennial and Generation Z category i.e. under 30 years of age. So, the young freelancing population of India is going to face a severe impact on their financials and monthly cash-flows.
Here are some steps that you need to take for your financial well-being against the uncertainties lying ahead caused by the global pandemic.
Look for alternate sources of income opportunities
Try and be flexible. You have a talent, you have skills, but is there any other way that you can showcase them? Look for alternate income opportunities in your area of expertise. Ahmedabad-based Manoj Bindra, 34, organised tours on a freelance basis for corporates and families. Organising tours amid the lockdown is out of the question. Besides, many of his clients are struggling to survive, and so, organising trips even after the lockdown lifts is almost ruled out.
But Manoj quickly realised that if he cannot take people out to new destinations, he could bring those destinations to his drawing rooms. He started hosting interactive webinars over Zoom on stuff like how to prepare for Himalayan treks, do-it-yourself mountaineering adventures within a budget, and so on. He started charging a small fee and adventure enthusiasts were only too happy to log on.
His webinars got an overwhelming response, his days got busier and his income kick-started. Well, perhaps not as much as he used to earn before, but good enough to get by, said Manoj. He now plans to continue hosting webinars after the lockdown lifts and life gets back to normal.
Saurav Basu, Head of Wealth Management at Tata Capital says, “This is the time to diversify the source of income and make your portfolio attractive to earn lucrative assignments when the economy recovers. Each project/assignment should help sharpen your skills and add value to your work.”
Assess your old clients; search for new
You may have been working with a set of clients for many years, but that could change, going forward. A pandemic such as this one forces companies to change their business models. Those that are frugal and cost-conscious are likely to survive and new business models emerge. For instance, freelance writers who earlier used to write for print publications may well need to adapt to digital content providers, since news is largely consumed online- and largely on your mobile phones- these days. In short; you’ve got to keep looking.
Nearly 70 per cent of Vishal’s income comes from his assignments in the hospitality and tourism industry, two of the worst-hit sectors by COVID-19 pandemic. Rohit Kulkarni, Vice President at Payoneer India says, “Focus your energy on sectors that are steady and lucrative going forward. Zero in on clients in a particular sector that have been less affected by the economic downturn.”
Over the last month, Vishal evaluated the scope for new advertising assignments in the pharmaceutical and healthcare sectors for six to nine months. He now uses free time to build a network with prospective clients in these sectors using social media such as LinkedIn, Twitter, etc. Kulkarni advises, “Be creative and learn new skills for prospective clients in your ideal time.”
Set competitive price and offer value-added service
If you are new to the freelancing circuit, a bit of competitive pricing helps. And a bit more adaptable as well. For instance, digital publications track the queries that get asked on search engines and customise content around that. In addition to the sort of writing that you specialise in, such customisation may also be required. But experts like Rituparna Chakraborty, EVP and Co-Founder, TeamLease Services say that seasoned freelancers giving online service actually score big during crisis situation despite pressure on costs in many businesses. “As for their fees they offer higher predictability and quality and hence may remain unaffected amidst the chaos,” said Rituparna Chakraborty, EVP and Co-Founder, TeamLease Services.
New freelancers, however, must invest some time in building credibility and track record on deliveries and timeliness, she added. If that gets repetitively established through multiple assignments you have the ability to price according to your skills.
Be frugal in expenses and maintain budget
We cannot emphasise on this enough. Build an emergency corpus, if you don’t have one already. An emergency corpus is meant to take care of your contingencies, your non-discretionary expenses, when you are out of a job or unemployed. Cut down on your expenses, Avoid taking any loans. “It’s important to maintain a stringent record of all essential expenses. Be disciplined with your budget and ensure that every penny spent is for a genuine reason,” Basu said.
Meanwhile, the Reserve Bank of India (RBI) induced 6-month moratorium for borrowers has come as a relief to Vishal who is busy paying his equated monthly instalment (EMI) for car loan of Rs 10 lakh. Use the moratorium if you are facing a cash crunch, but continue paying your EMIs if you can. Mrin Agarwal, financial educator and founder of Finsafe India says, “To get back to repayment, be on a stringent budget and cut down unnecessary expenses. Also, any surplus funds from freelancing assignments should be used to pay off the loans.”
Check your existing portfolio to see if you can generate cash by selling dud insurance policies or investments.
Buy term and health covers
An independent health cover is a must. Salaried employees at least have the benefit of office-provided health insurance benefits, but freelancers don’t get any such benefits. Have a health cover not just for you, but for your entire family. Abhishek Bondia, the co-founder and principal officer of SecureNow says, “The amount of health cover for the family should be equal to one year of annual income. For a term plan, taking ten times the annual income from freelancing is recommended.”
Apart from health insurance, a critical illness insurance plan is also vital.
In all this money management, do not lose your love for your work. Remember why you took to freelancing? Maybe you found a 9-to-5 job routine boring or perhaps, though it to be a deterrent to your freedom and creativity.
Searching for new assignments is always time-consuming and it will always be a pain to run after your payments. The COVID-19 pandemic is bound to put your resilience to test, but it also gives you a chance to adapt to newer ways to showcase your skills and better than that, upgrade your skills. Be canny.
Moneycontrol Ready Reckoner
Now that payment deadlines have been relaxed due to COVID-19, the Moneycontrol Ready Reckoner will help keep your date with insurance premiums, tax-saving investments and EMIs, among others.