smart freelancer's guide to saving money

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The Smart Freelancer’s Guide to Saving Money and Avoiding Debt: 5 Tips Every Freelancer Should Follow

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The trend toward freelancing is part of a viable, emerging pattern in employment that many professionals, parents, part-timers, retirees, and new graduates are finding increasingly appealing. Freelancing may offer the latest generation of recent college graduates a sense of job security and control in a market that has largely been unkind to millennials, whose employment rates have been staggering – and not in a good way. Indeed, millennials are not the only ones drawn to the freelance life; almost one year ago Entrepreneur featured an article claiming more than 53.7 million freelancers were currently working in the United States, which translates into a whopping one-third of the job market during the preceding months that the article was released.

Freelancing offers its followers a variety of sought-after benefits, such as flexible scheduling, reduced workloads, the ability to stay at home to care for a child or elderly parent, comfortable working conditions, freedom in choosing areas of assignments, and in many cases the ability to earn income without having to leave home. And for those who are worried about lack of access to group health plans, know that low-cost supplemental health insurance is readily available.

Freelancing also has opened the door to employment opportunities for groups that were otherwise limited. Creative professionals who may struggle to find constant, local work have the potential to thrive when marketing services remotely to a variety of clients across the country, and in some cases the world. Further, it has given retirees and parents of young children a way to stay active in the working world, while offering individuals with disorders such as Autism, disabilities, and limitations imposed from conditions such as social anxiety disorder or diseases with intermittent flare-ups an option to continue supporting themselves in part or whole. However, freelancing is not without its drawbacks. The previously mentioned Entrepreneur report cites the freelancer’s average annual income last year as ranging between $2,000 and $50,000 – a salary range that indicates an undesirable level of stability, and leading to the freelancer’s common career woe of uncertainty of steady pay.

Perhaps the freelancing student who is still living at a parent’s home or the part-timer who relies on another source of sustainable income as their household’s mainstay is not overly concerned with such a potentially limited yearly budget. However, most freelancers are well aware of the financial constraints that may loom and are exchanged for freelancing’s benefits. The growing market of freelance hubs have helped those seeking steady income, but even considerably successful professionals who choose to freelance must often make financial sacrifices and find themselves seeking ways to save money. If you are among the cash-strapped looking for ways to support the work you love, or if you are considering joining the freelance community, here are 5 money saving tips to help you avoid debt, keep your budget in check, and perhaps even be among those lucky enough to sock away a dollar or two.

  1. Don’t let yourself off the hook from investing in vital savings plans that you would normally contribute toward. Although many freelancers are living unknown-paycheck-to-unknown-paycheck, those who have chosen this as a supporting career must continue habits that they practiced (often without thinking) throughout other jobs that they have held. This includes continuing to support retirement plans that ideally would amount to 10-20 percent of your annual income. Other funds that require similar discipline are saving for college and household emergencies. Setting up separate accounts based on your household needs can help siphon the cash out of sight and reduce the temptation to spend it. Understandably, there may be a grace period when initially establishing yourself when you are unable to maintain strict adherence to a savings schedule, or periodic times when work falls through. Still, freelancing should not be an excuse to neglect your future.
  2. Digit is a platform that studies the spending habits of your personal account and transfers money accordingly. If you can’t afford to transfer funds, Digit ensures that those limitations are respected, even if you have been able to save more in previous months. It helps you keep track of your saving habits, and encourages saving, without you even having to think about it.
  3. Maintain at least the minimum health insurance requirements to protect against the event of catastrophic illness or injury. Even better, consider supplemental insurance options that are now available at reasonable prices to help cover related expenses for when you or a family member cannot work. Health insurance coverage should be considered non-negotiable whenever feasibly possible. Critical illness, while unpleasant to consider, affects millions of Americans every year. This year 1.5 million Americans will declare bankruptcy, with 60 percent of those blaming medical bills. Even more staggering perhaps is that almost 75 percent of those individuals had health insurance but were overwhelmed by deductibles, loss of work, medication costs, and other liabilities. This illustrates how the cost of a supplemental policy can actually save you money – even when you think you are completely covered by a traditional policy.
  4. Take advantage of all of the free online resources and websites available that are designed to assist freelancers. From penny-pinching tips, to lists of publishers seeking submissions, how-tos, freelance rate calculator, and more, these sites offer a plethora of information on how to save money, make money, and tips on increasing earning potential. There is also an online Freelancer’s Union with no membership fee that serves as a professional hub to collectively further support freelancers in their lives and work.
  5. Maintain a steady income stream by creating an account on one or more of the various freelancing job boards, such as the very popular Freelancer, which allow real-time bidding on jobs. If you are a writer, there are content sites that offer work on a pay-per-assignment basis, and although pay is generally not exceptional for these sites, it is a way to supplement intermittent periods when you are financially strapped and lacking other paid projects. Furthermore, some sites offer pay raises and incentives once you reach different levels, and others that offer additional paid bonuses and opportunities, such as Blogmutt, whose most successful content bloggers can own a share in the company. Freelancing often involves finding ways of “filling in the gaps” financially. By maintaining a few, modest supplemental job networks, you will feel more secure about potential hardships, and when work allows, supplemental income can become a tool for saving.

If the perks of a freelance career are important to you, the sacrifices can be managed. After all, being able to take a mid-day nap, work in pajamas, attend your child’s school performances, never have to abandon your dog for the office, and watch the news every morning while answering emails from your couch … make it a pretty good place to call home or office.

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