As a freelancer, money can be a big worry and occupy a lot of your thinking time. Delayed client payments, low savings and other bad money practices are often part and parcel to the daily freelancing lifestyle.
As a freelancer, having a money-saving plan need not be a pipedream. Learning how to manage your money and set a monthly budget is probably the only way to achieve this.
6 Ways To Save Money On A Tight Budget As A Freelancer
There are plenty of money saving ideas for budgeting your money well so you can live on a freelancer budget. Here are 6 ways to save money on a tight budget as a freelancer.
1. Track Everything
Do you use budgeting tools like a spreadsheet or a monthly budget calculator to track your expenses on a day to day basis? If the answer is no, then you quickly need to make it into a yes.
Conscientiously tracking your expenses and learning how to do a budget 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. As a freelancer, it’s essential to learn how to budget money on a low income.
There are actually some budgeting apps available which can help you with this aspect of your money and freelancing lifestyle.
As a freelancer, you can choose an irregular income budget app or self-employed budget app to get budget suggestions based on income.
You can also get some freelancer-specific or accountancy based programs or budget planner templates to help you achieve the same thing.
2. 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. This is one of the best ways to save money and budget.
If you want an elegant and effective way to manage your money, check out T. Harv Eker’s JARS Money Management System and read his book, Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth.
3. Cut Down on Unnecessary Spends
One of the biggest problems in the modern world is the temptation. A beautiful saree 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 money saving plans for stopping yourself from spending money unnecessarily are quite simple.
The most effective money management tip, 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.
4. Keep Long Term Goals in Mind
When you’re trying to figure out how to save money fast on a low income, you need to set goals.
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.
Besides learning how to save money and budget, you can also increase your freelancer fees or freelance consulting rates.
Setting yourself a goal of earning X amount by June 2019, for example, is both a career goal and a financial one.
This means you can work towards both and still manage to build your financial standing up by a great deal when it comes to actually hit your goal period.
5. Set an Advertising Budget
If you’re a serious freelancer, then chances are that you will be advertising your services in one way or another.
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.
6. Have Multiple Savings
Most freelancers have asked themselves the question, “What is the best way to save money?” 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.
The best way to save money is by having two nets to fall back on, as it’s a lot safer. It’s a simple trick and one that anyone who knows how to manage money 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, learning how to start saving money as a freelancer isn’t as difficult as you might at first suspect.
There are plenty of money saving tips 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.
I hope this guide to saving money as a freelancer has shown you different and smart ways to save money for long-term security.
Start applying all these ways to save money today and you won’t regret it.
Jennifer is a business freelance writer. She’s previously worked with companies that specialize in anything from ventilation systems to outdoor furniture. With years of experience, she likes to share her knowledge through her creative writing skills.