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