Freelancing comes with plenty of perks, including the chance to set your own schedule and work on the projects that really inspire you. However, there are also some downsides. Irregular income is one of the main issues that freelancers face. It’s not uncommon for freelancers to experience busy periods followed by a period of little to no work. For this reason, saving money as a freelancer can be more of a challenge.
Freelancer – Money Saving Tips
With a bit of planning and preparation, you can easily learn new habits that will allow you to save money like never before. Even things like getting a mortgage – which many freelancers think is the impossible – become attainable if you can learn a few good habits. If you want to save money and start building your nest egg, follow these simple money saving tips.
Stop Buying Things you can’t Afford
This might seem simple enough, but many freelancers fail to master this simple step. With so many items available on monthly payment plans, it’s easy to get tempted into thinking you’re getting a good deal. However, you will often end up paying a lot more for the item because of interest payments. Monthly payments can also spell trouble for freelancers as they might be easy enough to meet during busy months, but they’ll be a strain during quiet months.
Don’t Forget About your Taxes
Don’t wait until you meet the tax threshold before you start saving for taxes. At the very least, you should be saving 20% of every invoice. Even if you don’t even up owing that much tax, then you will have a healthy amount of savings that will help to bridge gaps in your income for the coming year.
Take Advantage of Tax Deductibles
Did you know that you can claim a portion of your utility bills as tax deductible if you work from home? There are so many savings you can make on tax as a freelancer, but you have to be clued up to be able to take advantage of them. Being prepared to manage your own taxes and learning all about the tax breaks available to you is one way to save a huge amount of money on your end of year tax bill.
Pay Yourself a Monthly Salary
If you set up a second business bank account, you can pay yourself a set monthly salary. Obviously, all of the money is your own, but you are limiting your access to a monthly allowance, which should help you to budget throughout the year. You might have a client pay a huge invoice one month, and it can be tempting to blow through this if the money is just sitting in your main bank account. However, if it’s in a separate account, you’ll be less likely to chip away at this nest egg.
Keep a Close Eye on your Monthly Outgoings
Do you know what is going out of your account and when? This is vital as a freelancer as you may have personal and business expenses going out at the same time. Ensuring that you keep tabs on your monthly commitments is essential. There are plenty of machine learning artificial intelligence money tracking apps available that will give you an overview of how much you are spending on different things. You might not even realise that your monthly cortado habit couldn’t paid for a fancy new coffee machine for your office.
Don’t Skimp on the Important Things
While it might be nice to get that yearly membership to a co-working club, it might not be entirely essential during the learner months. However, if your co-working club is a good source of business, then you can easily justify it. A huge part of Similar things include professional liability insurance. While it might not seem essential all of the time, it can save you from having your savings wiped out. Companies like Caunce O’Hara also throw in free legal advice, so your monthly premium could save you money in the long term if you need legal advice on a contract or non disclosure agreement.
There are plenty of resources available online to help you manage your finances as a freelancer, so you can feel safe in the knowledge that you aren’t alone in your struggles. As freelancing is fast becoming a popular form of employment, even the banks are getting on board. Ten years ago, it was unheard of for freelancers to manage to get a mortgage, but this is gradually becoming a thing of the past. With a little preparation, you can be a master of your finances and take control of your career.
Rebecca Harper is a freelance writer based in Manchester. She is an avid campaigner for freelancer rights and loves helping other freelancers to save money and grow their careers. She is involved in a country-wide campaign by Caunce O’Hara to raise awareness of freelancer insurance options and educate freelancers about the dangers of working without insurance.