As a freelancer, money can be a big worry and occupy a lot of your thinking time. Late payments, low savings and other bad money practice can be all part and parcel to the daily freelancing lifestyle. Having saving goals, then, can be akin to a pipe dream for some freelancers. Learning to budget well can be the only way to achieve this.
With that in mind, here are some money-saving and budgeting ideas to help your life as a freelancer.
Do you have a spreadsheet tracking your expenses on a day to day basis? If the answer is no, then you quickly need to make it into a yes.
Vigorously tracking your expenses is extremely important as a freelancer. You need to know where your money is coming from (clients lined up and contracts signed), where it’s going (expenses, necessities, etc.) and everything else in between. If you don’t track your expenses then it can easily get out of hand and you won’t know what’s coming or going moneywise.
There are actually some budgeting apps available which can help you with this aspect of your money and freelancing lifestyle. Take these examples: Mint, Acorns, PocketGuard and Every Dollar. You can also get some freelancer-specific or accountancy based programs to help you achieve the same thing.
Try to Do the 50/50 Approach
The financial goal in life is to be able to live off of half of your earnings each month, then put the other half to another goal. This can be additional savings or paying off debt. Either way, a larger proportion of your money should be able to be put into a savings pot comfortably in order to be beneficial to you when eventually needed.
So, for example, say you earn an even $2,000 (we’ve used dollars as standard currency) in one month. Half of that should be what you live off of, so $1,000 goes towards anything from food to travel costs. Then the rest goes away into savings.
Alternatively, you can try the zero-sum budget. This is pretty basic. But, it means your necessities are spent (food, water, rent, etc.), you put a small amount for other things and then the rest goes straight into a savings account. Thus leaving you with a zero sum at the end of the month. This way, you probably live a little more on the 40/60 ratio rather than 50/50.
Cut Down on Unnecessary Spends
One of the biggest problems in the modern world is the temptations. A beautiful sari may look good, but buy too many and the cost obviously mounts up. This discretionary spending is what needs to be cut down in order to make sure your money-saving efforts as a freelancer are as successful as possible.
This one is, in all honesty, about cutting down on your own natural inclination to spend. Sometimes we can’t help ourselves, but when we’re freelancing it’s important to take things such as random spends into consideration.
Some of the best techniques for stopping yourself from spending money unnecessarily are quite simple. The most effective, in this writer’s opinion, is that of sleeping on a purchase. This means that you have to urge to buy and you stop yourself then and there. Take the time to sleep that night. If you wake up the next day, think about it and it’s still a purchase you want to make? Then go for it. At least 7 out of 10 times, you will wake up in the morning feeling much less enthusiastic about your impulse purchase. Thus, making this an ideal way to try and curb your random spending.
Keep Long Term Goals in Mind
Everyone has a long-term goal. Be it a purchase, a career goal or something a little more ambitious, it doesn’t matter. Time passes and, realistically, you will have different goals and financial choices which you want to make. Buying property, financial investments and other such long-term goals will quickly become impossible if you haven’t got a plan in place.
Having a definable and determined goal, then, can be extremely valuable in order to help you save money.
Also, your long-term financial goals can absolutely match up with growing your freelancing business. For example, the longer you freelance the more money you want to make. Setting yourself a goal of earning X amount by June 2019, for example, is both a career goal and a financial one. Which means you can work towards both and still manage to build your financial standing up by a great deal when it comes to actually hitting your goal period.
You may also want to take your freelancing to the next level given time, turning it into a full blown business. This comes with it quite a bit of expense – from registering your business to hiring corporate solicitors – so, it can take quite a bit of saving to get to that point. Which means setting it up as a long-term goal is vital.
Make a Budget for Advertising
If you’re a serious freelancer, then chances are that you will be advertising your services in one way or another. This may be a simple thing like signing up for a Pro Fiverr account or it may be a little more serious, such as Facebook advertising. Either way, you need to work out what you spend advertising your services. You may find that it’s an eye-watering number and for that reason, you can quickly cut down on it.
For example, if you spend a lot of money advertising through a channel that doesn’t get many conversions then you need to stop. It’s as simple as that.
Advertising is absolutely necessary as a freelancer. In most cases, you won’t be able to stand above the crowd of other noisy freelancers without it. But, if you’re not using it right then it can be more of a financial burden than a help. Cutting it loose can, therefore, be the wiser move in terms of your budget.
A good idea is to use a small budget across a few channels, testing each. The channel which then produces the highest return on investment during this period should, theoretically, then be the one you choose to invest more heavily in. As if it returns well even with a smaller budget it should make good use of an even higher one. So, if this is a paid LinkedIn account where you directly reach out to others or a Facebook advertisement for your service it doesn’t matter. The one with the greatest ROI is the one you should invest in further.
Have Multiple Savings
Emergency savings are very important, especially as a freelancer. However, you need to keep them separate from your other batch of savings as well. This way you have both short and long-term contingency plans which can work in your favour.
Having two nets to fall back on is a lot safer, after all.
It’s a simple trick and one that anyone with any money-saving habits can tell you works. It also helps you to set up financial priorities. Short term savings go in one pot and are a much smaller beast, while other longer-term goals go in the second pot and this one is one that increases much more favourably over time.
In conclusion, saving money as a freelancer isn’t as difficult as you might at first suspect. There are plenty of ways for you to work through your budgets, financial goals and money in order to ensure your money is capable of building up over time. It simply takes some self-will, dedication and a little bit of financial savvy.
Easy peasy! Well, maybe not. But it is achievable given the right mindset. Start today and you won’t regret it.