Saving Money as a Freelancer

Trying to earn a livelihood as a freelancer can be challenging. You have to work harder and deal with several clients while negotiating your own pay. Clients understand this and sometimes take advantage of freelancers. Late payments, poor quality reviews, miscommunication, and unrealistic demands are just some things a freelancer has to face on a regular basis. Whether you are a newcomer or experienced freelancer, you should know how to save your money responsibly. With CoVid-19 changing the way we work, freelance or work from home is going to get quite common in the future. It is important that you know how to save your money and make the most of it.

Working freelance can take various styles and forms. You could be working a day job and have a side gig as your hobby. You could be working freelance and studying. Or you could be working for different clients and have your own schedule. Whatever the form, you are your own boss. This means you have to take control of your money and finances. Freelance projects are unpredictable and can sometimes not be available for months. You have to plan for those uncertainties and rainy days.

• Make a monthly budget- This may sound boring and difficult but trust us, you have to make a monthly budget. Log your expenses- rent/mortgage, food, utilities, fuel/car. This gives you an idea of how much you need every month. Sketch a second budget that lets you know the extras you want or have every month- dinners, gifts, trips, or purchases. Putting down a number gives you a clear picture in your head. You can work towards that goal and spend smartly.
• Have an Emergency Fund- Financial experts recommend that you set aside three-six months of your paycheck for an emergency fund. This kind of fund is very important for freelancers. Unless you have regular clients who provide you with monthly jobs, there will be some months where you won’t be earning enough. The emergency fund is a great way to have a backup and not worry about asking for loans or advances from clients. Even a small amount matters so start saving from your first paycheck itself.
• Create a separate Bank account- Having a separate account for your freelance business will allow you to understand your finances better. You can transfer some money to your personal account when you need it. A bank account for business requires different documents in different countries. Be sure to do some research before you consider that. A separate bank account for your business can allow you the ease of tax filing too.
• Be Practical- Freelancers, especially creative workers don’t like considering the financial aspect of working. They don’t plan or have a formal understanding of what their expenses and finances look like. This behavior when you are the boss is unacceptable. You have to be practical in money matters. Start knowing your own worth and only take projects that are worth your time and effort. Learn about taxes, filing, budgeting, and expense reports.
• File Taxes- People with regular jobs get their paychecks after the tax has been deducted. This saves them a hassle of leaving room in their budget for taxes. Unfortunately for freelancers, they have to file taxes on their own. Depending on where you live, learn the tax filing system or have an accountant who can help you with this process. Nowadays a lot of it is done online and its very simple. Taxes can be filed quarterly or yearly, again depending on the tax structure of your country and region.
• Get Insurance- Another disadvantage of being a freelancer is that your client or company won’t provide you with insurance. It is very essential that you get medical or disability insurance. This will cover your expenses if you have an illness that prevents you from working. It is also handy if you have any medical emergencies or issues. Insurance companies even have insurance policies for specific occupations so you may want to look into that.
• Negotiate- With every year, your expenses are bound to increase. Negotiate with clients in a manner that you get paid for the time and effort you put in. Pitching for roles that pay less is something you should only consider when things are dire or you are starting out. Draw boundaries and explain firmly to clients about what kind of work they would be getting for the money they pay you.

Freelancing is a bold career choice. It may work for some people if they know how to navigate the industry. Some people can’t achieve as much as they can because they are poor at planning or understanding finances. It is tough but if you put in enough time and effort then you can maximize your finances and save considerable money. There are free websites, apps, and tools to plan your budget, account for emergencies, learn how to negotiate better pay as a freelancer, and even get freelancing gigs. What are you waiting for? Get saving my friend!