Making the switch to freelancing can be an exciting time, but it also comes with a steep learning curve. From learning to deal with the stress of irregular income, to keeping yourself motivated when you don’t have a boss breathing down your neck, it isn’t a simple transition to make. A popular complaint from new and established freelancers is that they find it difficult to plan financially. This is often a result of the sporadic income and the added pressure of chasing clients for payment. But with some careful planning and a few small changes to behaviour, you could be well on your way to saving up for that new car, a deposit for your first home, or the beach holiday you’ve always dreamed of.
Create a Realistic Budget
Once you understand where your money is going, you’ll be able to identify areas of saving and you’ll have a better idea of how much you can afford to save every month. This can be achieved by creating a monthly spreadsheet outlining your income and expenses, or use specialist accounting software to do the hard work for you. Once you have a grasp of your monthly commitments, you can start factoring in savings.
Keep Business and Personal Separate
It’s important to keep your business expenses separate from your personal expenses, and not just for your tax return. Setting up an additional bank account for your business can help take some of the strain off your personal finances. Using bookkeeping software will help you to keep track of your money and help you to complete your tax return. There’s also the risk you’ll fail to identify costly business expenses if they’re always hidden in amongst personal spending.
Set Realistic Goals
Having a buffer of savings can help take off some of the pressure during the quiet months or if you unexpectedly fall ill. As much as we’d all like a substantial portion of cash behind us, it might not be realistic to set aside huge amounts every month. When creating a budget, it’s important to be realistic about what you can save every month. Decide if you want to be strict, lenient or to find the middle ground with your monthly budget.
Try Micro Saving Tools
Instead of putting aside a chunk of money every month, set up a direct payment to put aside a small amount every day or week. There are apps available that will allow you to automatically transfer small amounts of money to a digital wallet at regular intervals, taking the guesswork out of saving.
Have a Goal in Mind
Trying to save money with no specific goal in mind is much more challenging as you’ll be tempted to dip into the savings pot more frequently. If you have a goal in mind, you’ll be spurred on to your goal. Even if you don’t have a specific thing in mind to save for, just having a timeframe should help keep you motivated.