10 Tips for Saving Money as a Freelancer

Now that I’ve been freelancing for well over a year, I’ve dealt with my fair share of expenses, taxes and other terrible money sucking things we have to deal with as the self-employed. There are several ways to manage these of course, and ways to save money doing so.

Unfortunately, just because we stay at home it doesn’t mean that we save more money than someone who works outside of the home. Yes, we have to pay for less gas, we don’t have to pay to eat out, nor do we have as many car expenses. But if you’re not careful, you can actually spend a lot more than someone who does drive 30 minutes away to work.

Here are ten of the ways I’ve found to save money for everything we deal with as business owners.


Tips for Saving on Insurance

One of the reasons a lot of people decide not to become freelancers, is because they believe they can’t find affordable health insurance. However, this is really really wrong! Depending on your company, a lot of times you can find comparable or even cheaper insurance on your own.

  1. Health insurance. If you’re pretty healthy, don’t go for the all-in-one plans. They are unnecessary and overpriced. Instead, aim for a high deductible HSA account, which means you can contribute thousands of dollars to an HAS account tax-free, and use it for all medical expenses and prescriptions. Don’t just check out the major companies like Blue Cross Blue Shield, they will often charge you full priced rates. Instead, look for smaller companies that offer BCBS (or your company of choice). For example, in TN, I got BCBS coverage for only $50 a month (width a $2500 deductible HSA account) by going through Farm Bureau and using their Tennessee Rural Health Plans. Same insurance company. Same coverage. My savings: $300
  2. Car insurance Don’t forget about reducing your car insurance. A lot of companies base part of their rates on the amount of miles you drive every day, so if you no longer drive 2,000 miles a month, tell your car insurance company that to get a reduced rate. My savings: $50/month

Tips for Reducing Expenses

Being a freelancer means you have a lot of different expenses than the average eight to five worker. It’s tempting to go out there and buy all the cool office supplies you had at the old office, but in reality, you’ll often only need some lined paper and a pen. Anything else can be overkill.

Here’s some other tips for saving on expenses:

  1. Track business expenses. Keep track of all expenses so you can deduct them from your taxes. Examples of these are Paypal fees (from accepting client payments), ink, new computers (yes the iPhone/iPad count if you use it for work!), paper, pens and even office renovations and utility payments. My savings in 2010: $13,000

Tax Savings

Taxes sound like a scary thing to freelancers, but they’re actually quite easy to deal with. Here are a few ways to save some money in this area:

  1. TurboTax. I use TurboTax’s Business Edition (online) to do my taxes every year. It only cost me $75 and takes you step by step to find all of your expenses and write-offs. I was actually able to get some money back this year! Savings: $3500
  2. Bookkeeping. Some people prefer to pay someone else to do this, but I’ve found it’s really, really easy to do it yourself once you find a good system. I use something called Billings app and it takes care of everything for my business. I’m able to write up invoices and estimates, keep track of client deposits and payments, as well as all business expenses. using their reports also help keep track of 1099s and allowed me to do my taxes easier this year.

Save on Food

The problem with freelancing is that you can get pretty lonely. You have a tendency to want to go out more, therefore spending more money on gas and eating out then you would at a normal job! It’s important to recognize this behavior and stop it immediately! Here’s what I’ve done myself to limit the amount of money I spend on going out.

  1. Eating out. Go out to eat only once or twice a week.
  2. Eating in. Buy lunch food you actually want to eat. There’s no worse budget buster than opening the refrigerator to find you want to eat….none of it.

Saving on Home Expenses

Working from home has its own expenses as well, that can quickly get out of hand. Here’s how you can save some much-needed dough.

  1. Electricity. Your electric bill will go up substantially just because you’re home all day and using lights, computers and other devices. There’s not much you can do to combat this other than to be mindful of what lights you have turned on. Even when it gets dark outside, if I’m the only person home and am working in the office, I make sure there are no other lights turned on in the home.
  2. Internet. If you’re lucky enough to live in town, you may be able to save on internet by walking to your local cafe to work. I did this myself when I first moved into my old apartment several years ago and I was able to survive without internet for three months! (shocking, I know!)
  3. Phone. Is your landline really necessary? Probably not. I’ve saved over $20 a month by simply using my cell phone instead of a dedicated landline. Aim to make most of your communications by email or IM and you won’t even need to increase your minutes.

There you have it–a total of ten money-saving tips.

Share Your Tips

Now it’s your turn to share.

How do you save money as a freelancer?

Image by yomanimus

Comments

  1. says

    Nice tip with the car insurance driving miles. I’ll definitely check that out.

    I’d add that money are not everything in life and quality of living is important.
    What good that we are working non-stop and don’t go out to entertain and socialize.

    A very important tip if you want to save even more money, is simply charge more while improving the quality delivered.

  2. says

    I saved a lot of money this year by keeping a dated log of my business related travel, with notes of why I went out. Even working from home you need to get in the car on occasion — client meetings, visiting the local printer, buying the iPad, pens and paper you mention. Tracking that mileage can add up to a substantial deduction come tax time.

  3. says

    Coupons!

    Also, to add to Brad’s comment — I’ve found that keeping a detailed record of my spending also allows me to reassess where I’ve been spending most, where I’ve been needlessly spending and where I can cut back more. You may be surprised by where your money is going!

  4. says

    If you write off a portion of your home for your home office, you can also deduct a portion of your cleaning service and exterminator if you use those.

    And to help with your electric bill, keep your printer turned off if you don’t use it throughout the day. And put your computer “to sleep” when you log off. I saw a substantial drop in my electric bill when I started doing those two things.

    Great list!

  5. says

    Very much on target Amber–especially the part about buying lunches you like. It’s so true!

    You may think you’re saving money by buying a can of soup–but really, how often do you WANT to eat a can of soup. Go ahead and spend a little more on your home lunch so that you’ll go out less. (But, don’t eliminate going out altogether. You do need to leave the house sometimes.)

    Thanks for sharing this. I know a lot of freelancers struggle with budget because our income fluctuates so much.

  6. says

    Nice article – I didn’t even think about adjusting my car insurance!

    For me, the coffee shop can be a “quiet” budget buster. I do go and work for a few hours over a ‘professionally made’ latte once or twice a week, but my new compromise is a $40 Mr Coffee Espresso machine from Target. Beans and soy milk from Costco, Torani syrup from World Market, and you’ve got yourself a $1 latte.

    One more very important money-saving tip for freelancers: shop around online when you have to replace computer accessories and cords. I replaced my laptop cable for $10 through an ebay seller, and sure it was a cheap imported cable, but the warranty was 2 years and the alternative was $100 at a big box store.

  7. says

    Eating out’s my biggest thing — I do it far more often now that I work from home because its an excuse to get out! If I’m alone in my home too long, I also tend to “run a few errands” …then spend way too much, or sometimes even go full-fledged shopping. I’ve learned to now try to do things that get me out of the house that are cheaper, or completely free. I go to a cafe or the library to work, I go work out, hang out with some friends, etc. instead.

    I agree with several of the other comments here so far too — track expenses and income religiously! It’s so much more important as a freelancer because there is not a regular paycheck coming in another two weeks. When I do this I can always tell when I’m spending too much on unnecessary things, and stop myself. Likewise, I can track my income to see if I need to be charging more, or just need to stop slacking so much!

  8. says

    I agree with Kayla! Since working from home means less socializing with coworkers, there’s definitely a temptation to go out more to feel social.

    I use my cell phone instead of a landline phone, but because my work as a journalist often requires lengthy phone calls while I interview sources, I supplement my cell phone minutes with Google Voice. I’d been using Skype, but then I discovered that Google Voice can assign me a local phone # for free and that I can call landlines for free (previously I’d paid $3/month to Skype for unlimited calls to the US and Canada but I hadn’t paid extra for a phone number so people couldn’t call me unless they had a skype account). The other nice thing about Google Voice is that it transcribes voice messages for me and I can set it to forward to my cell phone. It’s been a huge money-saver for me!

  9. says

    Good tips. As far as the phone goes, I’m not so sure a cell phone is necessary either. Here’s what I do, and so far, it’s worked for me for over a year.

    1. Get rid of the cell phone (I went from iPhone to no phone).
    2. Get a land line with local calling only.
    3. Sign up for google voice, and set it up to forward to you wherever you may be.
    4. Set it up to send you emails when you get voicemails.

    My savings: $150/month.

  10. says

    @Chris Not sure I’d want to be without a cell phone, especially for:

    1) Car Accidents
    2) Traveling
    3) Family

    etc etc

    What would you do in those situations? Especially if you were stranded in the middle of nowhere? My cell phone has saved my life more than once.

  11. says

    I didn’t even think about the car insurance or even that I could deduct Paypal expenses! Thanks for this great list, Amber. :)

    Eating out is definitely something I absolutely need to cut back on.

    Thanks again!

  12. says

    @Amber
    regarding the landlines. I’m not sure how things work in the US, but if you’re trying to run a business (freelance or not) and you don’t have a landline there are people who wouldn’t take you seriously.

    It’s good if you can find different money eaters and cut them out of the loop, but when it comes to the way you present yourself, cutting 10$ a month for a landline may cost you a lot more in the long run.

  13. says

    I love this article! I am laughing at the “Saving on Food” tips. I looked at my bank account and realized I went out to eat like 4 times last week! The meals weren’t that expensive but it adds up! On Sat, I finally decided to go to the store. And I agree to get food you actually want to eat, b/c if you don’t you will end up going out again…that’s money spent on groceries and dining out! Too much!

    Great tips, thanks for sharing!!

  14. says

    Some good advice, but you’re missing one of the biggest money saving tips out there, barter. Trade services with other small business. I’ve traded my writing services for graphic design work and a brand new website. I’ve also traded photography services with restaurants for hundreds of dollars worth of free meals.

    Be creative. Call landscape companies in the winter when they’re desperate for work and trade your services for some tree trimming or lawn mowing around your office or home. Once you get into the habit of looking for ways to barter you’ll realize the opportunities are everywhere. A lot of small businesses are open to trade and it’s a great way to compile high-quality clips, save money on expenses, and get word of mouth advertising in your market.

  15. says

    A couple good tips there except, as usual online, they seem to be aimed at the USA audience, for instance here in the UK we can’t have the internet without a wired home telephone so we can’t save by having no landline.

  16. says

    Don’t get your hopes up on saving $ because you work from home. Lots of people try to do this because they think it will save but depending on where you live, it may do the opposite. We attempted and found out our auto insurance would ding us for driving less because they feel we wouldn’t be driving enough to keep up with normal driving habits.

    Another way to save is to drink coffee at home and not at boutique coffee shops. I know I once spent over $100 a month buying coffee out.

    And for those who spend $ on landlines as fax lines, you’ll save $ on paper and getting rid of that landline by using an online 1-800 fax service that sends faxes to your email. Mine is a $35 a month savings.

    As for cell service, we don’t get service where we live, so we have a pay as you go cell that we use. It costs us $100 every 5.5 months.

    And as far as that landline is concerned, AT&T has flat-rate business plans for as little as $70 a month (unlimited local and long distance). When I decided a second business line wasn’t necessary a few years ago, I set up a roll over service to my unlisted home #. That cost is included in the $70 mentioned above. It keeps my home line separate and I can write off both lines.

  17. says

    I disagree about the internet. I pay $1.50 a day for internet. I could pay even less if I switched to DSL. Some caffe’s also get a little antsy about you taking up a seat for too long or they have something like a $5 dollar minimum before they give you access. I would suggest the library but some libraries have a time limit on their wireless.

    I used to live out in the countryside with limited dialup. Lugging a laptop from place to place just to get a few hours work done was not worth it.

  18. says

    Cable is another area where you can save. Unless you watch a ton of TV, it’s just not needed anymore. A good number of shows are online now and set top boxes like Roku, Boxee, and Apple TV offer a lot of services to your TV. Yes, sports are available.

    I don’t agree on the internet, public wifi isn’t that secure.

  19. says

    Nice tip with the car insurance driving miles. I’ll definitely check that out. I’ve been spending most, where I’ve been needlessly spending and where I can cut back more. You may be surprised by where your money is going! One more very important money-saving tip for freelancers: shop around online when you have to replace computer accessories and cords. I agree with several of the other comments here so far too — track expenses and income religiously! It’s so much more important as a freelancer because there is not a regular paycheck coming in another two weeks. When I do this I can always tell when I’m spending too much on unnecessary things, and stop myself. Likewise, I can track my income to see if I need to be charging more, or just need to stop slacking so much! Voice is that it transcribes voice messages for me and I can set it to forward to my cell phone. It’s been a huge money-saver for me! The meals weren’t that expensive but it adds up! On Sat, I finally decided to go to the store. And I agree to get food you actually want to eat, b/c if you don’t you will end up going out again…that’s money spent on groceries and dining out! Too much!

  20. says

    In my case, I really save a lot working from my own home because I don’t like eating out. I prefer to dine in my own kitchen and also, I don’t go out that often. My only social life is going to the gym :)

  21. says

    Thanks for sharing this with us. I’ve quiet enjoyed the experience of reading your blog so far. Maybe some cliff notes at the bottom would be a useful addition to summarize the lessons…regardless i will be checking back here so keep up the delightful work,your readers appreciate it…

  22. says

    Here are my tips on how to save money on phonecalls: use Skype instead of your landline or mobile. Calls to another Skype user are free and calls to non-Skype users are a fraction of the normal cost. In the UK, if you use DialAbroad, you can call over 100 countries for under 2p a minute. Another low-cost way of calling abroad from your mobile is to buy a mobile phone card from a company such as Lebara Mobile – it will save you a packet.

  23. says

    @Amber,

    You bring up a good point. I forgot to mention that I keep an emergency pay-as-you-go phone. I always keep at least 30 minutes on it for, well, emergencies only. That costs me $10 every three months.

  24. says

    I’m loving these tips here as saving money is something I really have to learn as I’m a certified shopaholic ( oops.. ). Skype has been the biggest blessing for me, where I don’t have to spend a lot in having an hour of talk time. Just imagine doing that on your phone, and think how much charges you’ll have each month on international calls. Yikes.

  25. says

    Very good point about the landline costs. However, my solution is to purchase a Skype number. This was it’s like £10 for 3 months and you get a genuine landline number that forwards to your Skype account. And if you’re really missing a genuine phone rather than a headset you can buy Skype usb phones!

  26. says

    thanks Laura , i am also a free lancer of seo and working from , i don’t have more project for work then how will i save money and , let me know, how to get more project ? as a free lancer please suggest me , thanks

  27. says

    # Internet. If you’re lucky enough to live in town, you may be able to save on internet by walking to your local cafe to work. I did this myself when I first moved into my old apartment several years ago and I was able to survive without internet for three months! (shocking, I know!)

    How can do you live without internet at home? if that’s me, may i’ll be shock, because i’m not comfort if i work on local cafe

  28. says

    Thank for an interesting article.

    I was wondering how do you claim the paypal costs? Do paypal create invoices for their charges? I haven’t seen that option.

    Many thanks
    Nathan

  29. Millie says

    I still believe that every home needs a landline, especially if there are kids still living at home. But what I don’t think is a wise investment is a contract cellular phone such as AT&T. They have the iPhone but there are many other smartphones which operate just as well with prepaid providers. For example Tracfone prepaid phone has a huge array of economical phones as well as smartphones. And many of these phones come with double minutes for life every time minutes are activated. So, for a $30 card you actually get 60 minutes. I usually can do a whole month for under $25 but I’m not a heavy texter or cell phone user. I guess this also has to do with how much we spend on cell phones. Do we really need to be connected at all times, or are we willing to go back to basics and use the phone for the occasional necessary conversation?

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