How to Save Money While You Get Your Freelancing Business Going

save-moneyAre you struggling to make ends meet as a freelancer?

You’re not alone.

Let’s be honest. Getting a freelancing business off the ground can be really difficult. The feast or famine cycle catches many who’ve been accustomed to a regular paycheck by surprise. It’s also pretty hard to budget when your income is irregular.

You can get through those first difficult months as a freelancer, if you know what to expect and how to manage your money properly. In this post, we discuss those first difficult months and share some tips for getting through them.

We’ll begin by discussing what you should do before you start freelancing.

First, and Foremost, What to Do If You Can

The first thing that anyone who is considering freelancing full time, but has not yet taken the plunge, should do is to amass some savings. At a minimum, it’s a good idea to have enough to cover your expenses for three months. In difficult economic times, six months of savings may be a safer amount to set aside.

This money is NOT to meet the expenses of your freelancing business such as purchasing new computer equipment, paying Internet fees, or website hosting costs. Rather, this money should be earmarked for your personal bills. You will use this stash only when you absolutely need to. It will come in handy for those “famine” periods or for times when a client payment is late.

Perhaps, this advice comes a little bit too late for you. Maybe you’ve already moved to full time freelancing without savings in hand or you’ve been thrust into freelancing through circumstances like job loss or other something else beyond your control. You’re already struggling.

If the previous paragraph describes you, don’t panic. You can still benefit from the rest of this article.

What to Expect

Now that we’ve discussed the importance of savings, let’s move on to what you can expect as a new full time freelancer. Here are a few points to remember:

  • You must market to get gigs–The work is out there, but you need to find it. You will have to work hard to get your business established. This means applying for a lot of projects and making a lot of contacts.
  • Most projects end–You should continue marketing even when you have a project. That is because most projects eventually end. Even if you have a long-term project and feel fairly secure, it is good idea to keep making connections. This effort will minimize any “famine” periods.
  • Some clients pay late–Sadly, there are even a few who do not pay at all. Over time, you will learn to recognize and protect yourself from deadbeats and scammers. However, it’s not at all unusual for a new freelancer to experience a slow paying client or a scammer at least once.
  • You are responsible for your own benefits and taxes–Freelancers who forget this often find themselves in a rough place come tax time or
    if they happen to get sick. Take the proper precautions to make sure that you are prepared.

All of these points directly affect your financial well-being. Without proper preparation, a slow period could be devastating to a freelancer.

Ways to Save Money

Saving money is crucial to freelancers for two reasons:

  • You need savings to see you through slow times (as I mentioned earlier)
  • The ability to live on less will stretch those savings even further

Here are ten tips to help you save money:

  1. Consume less. While this may seem obvious, for many it isn’t. Take a good hard look at where you spend your money. Ask yourself if you really need everything that you currently pay for. You can even adjust such fixed costs as electricity by changing your thermostat settings.
  2. Have a written budget. Somehow, putting your personal financial goals in writing helps solidify them. Make a budget and keep it current. Even if you use one of the many excellent budgeting packages available, printing your budget out and posting it can help you remember.
  3. Do it yourself. This may mean cooking meals at home instead of eating out, doing your own yard work or other minor home repairs, or doing any other task that you might normally hire someone else to do.
  4. Double dip on deals. Take full advantage of sales and other promotions. Whenever you can, combine promotions. For example, using a coupon on a sale item could yield big savings for you. Also look into frequent buyer discounts.
  5. Avoid disposables. You pay big for the convenience of being able to use something once and throw it away. While buying something more permanent (say a thermos versus plastic bottles) that you can reuse may initially cost a little more, over time you will save money.
  6. Buy used. Many things are just as good bought used as when they are bought new. Why pay for new if you don’t have to? The list of things that can be bought secondhand ranges from big items like cars and computers to smaller purchases like clothing and books.
  7. Sell what you can. Nearly everyone has some new or nearly new items lying around that they rarely use. If you’re short on money, it may be time to sell some of these things. eBay, or even your local consignment shop, could convert your unused junk into cold, hard, cash.
  8. Combine trips. Gasoline can be expensive. So can car repairs. It is a good idea to combine your trips. Try not to leave home for just one purpose. If you’re going to a friend’s house, stop at the store on the way home.
  9. Entertain at home. You can entertain at home for a fraction of what it costs to go out. Also, look for free alternatives to entertainment expenses such as going to the park instead of the amusement park or checking a DVD out of your local library instead of renting one.
  10. Take care of your health. An illness could lead to a major financial setback. Not only could sickness keep you from working for a while, but you could be stuck with expensive medical bills. It’s best to take care of your health and reduce health care costs by staying well.

We’ve explored a whole list of tips that can help you save money. Now, I’d like to share some of the steps that we took when I began freelancing.

What I Did

When I started freelancing nearly eight years ago, we also underwent a major lifestyle change. We cut back on many convenience items that we had come to rely on. We also learned to buy and sell used items. I became adept at using coupons efficiently. We reacquainted ourselves with free entertainment options (such as the parks and the local library). We turn the thermostat up in the summer and down in the winter.

I won’t say there wasn’t any grumbling, but over time the family came to realize that all of the changes were worthwhile.

Your Turn

Did you adjust your lifestyle when you started freelancing? What money saving tips would you give to other freelancers?

Share your tips and stories in the comments.

Image by notionscapital


  1. says

    It’s crucial to learn how to save [keep] money and invest them at the same time.

    do you have any suggestions for free software tools which enables us keep track of the spendings and receivings?

    I’d also love to hear about your experience with such; I’m particularly interested if there are online tools we could use, such as google docs… :)

  2. says

    Laura, in this economy these tips are great for everyone. When I first started one expense I cut back on was the bookstore. I checked out books from the library instead of buying. It allowed me to read many more books and save money. Partnering with others to combine expenses is another great way to save. For example, phone services, webinar services – starting out you may need them but not have heavy use so sharing the expense with another freelancer will cut your expense.

  3. says

    Great article. I continue to read these articles even when I’m in school, not fully freelancing. However, I have found that all of these articles get me thinking about freelancing full time (or not) and what I weigh the pros and cons that these articles list. Thanks!

    For myself, I created an Excel spreadsheet that lists all my current income and expenses and everything within a nice, neat and tidy spreadsheet. My problem, is the inputting of the information. It’s tedious to do myself, but something I hope to continue (I just haven’t done it in a while, so I need to update it with current bills/purchases). I find this way forces me to look at what I’ve been spending money on and allows me to see where the most cost lies; giving me that double-take on whether or not I should be spending that much in one area.

    It’s nothing fancy but it does do the math on it’s own (simple addition/subtraction) which, for my situation, is all I need. But I built the spreadsheet hoping that one day I might share the idea and give out the file for those wanting it. Even just to look at (of course, not with my values) :)

    Keep up the great articles!

  4. says

    Hi Raviaa! A few weeks ago one of my co-bloggers reviewed a budgeting package. The same post listed several other budgeting packages. I believe that those packages will help track income and expenses. One of them may be what you are looking for.

    Karen — Thanks so much for your tips. I love the library. I think it is an underused resource. Many people don’t realize that some public libraries also loan out movies and CDs. One library near me even lets parents check out board games like Monopoly and Clue.

  5. says

    Luckily for me there have been few adjustments in my lifestyle because I’ve been doing it since leaving school – so it seems like second nature to me.

    Sometimes I’m rolling in money but other times I’m struggling like crazy, but I still manage to get by.

    My advice to anybody who wants to become a freelancer is this: do not think you’ve got an easy ride and that all of the above do not apply to you because you just got that major contract. There will definitely be a time where you need to get the money out of the savings.

    The way I save is by putting a percentage of my earnings into a savings account every time I get paid and it works a treat.

  6. says

    It’s a good idea to always have a large cushion of savings, even if you aren’t freelancing full-time or if you’ve been in business forever. You never know when you’ll find yourself without a job or clients.

  7. says

    Thanks for the awesome reminders, Laura!

    For freelancing parents, I would advise a stash of at least one year’s living expenses – before you quit your day job and go into freelancing full-time.

    I’m no good at saving myself, even though I know all the how-tos and nobody needs to remind me that “It’s not how much you make, it’s how much you keep that matters.” I always manage to spend as much as I make. Ugh!

    My particular vices include books, training courses, gadgets and software that can easily be justified as business “investments.” They’re considered business expenses for tax purposes as well.

    But still… those of us who have braces, music lessons and other family expenses, not to mention retirement to save up for, saving is an excellent idea!

  8. says

    Thanks for the additional tips and pointers Rick, Luke, Amber, and Lexi! I agree that savings are important to everyone.

    Mike, I’m not quite sure what you mean buddy. I use most of these tips currently and they do work. There might be isolated cases where a tip wouldn’t work, but in general, the concepts are good.

  9. says

    What a timely article Laura! My husband and I are going through this now since the holidays were slow and I’m just starting to get into my freelance writing career. I think it’s been a tough road and an adjustment but I definitely can see how learning how to live with less is important even when you’re doing well financially.

    We started using a free financial software website to track our expenses and are trying to cut down by eating out less and seeing what things we don’t need.

  10. says

    Hi Laura,

    Your sensible advices are undeniably the supreme guidelines for all budding as well as experienced freelancers. I often find myself monotones in a way of working freelancing job. i am sure that your ten tips definitely will bring some color on my damp wall. Thanks a lot.

    Warm Regards

  11. Rich Bailey says

    Absolutely great article. Might I suggest for those looking for free budgeting tools that MINT is the best application you can use that also provides you with alternative ways to save once you plugin your budgets. This works great for if your looking to lower your car insurance or credit card rates. I highly advise you give the site a chance.

  12. says

    Aah yes, I couldn’t agree more that living frugally is a must for any freelancer, at least until they get their business established. I remember cutting back the most on my groceries by avoiding convenience foods, snacks, and cutting back on things like meat (replaced with cheaper and healthier fruit and veggies!). Great post and fantastic tips.

  13. Gatro says

    Another great way to save money online for start-up e-taliers is having your products or services listed for free in major shopping sites. This will enable your business to have brand recognition and also create massive awareness.


  14. says

    being a personal chef and full time writer is a great situation to be in and yet I’m caught between a rock and hard place. personal cheffing is a luxury. Not everyone can afford one. Even chefs for private parties, soirees are a luxury and I’ve seen a drop in my clientele, sadly enough. As for the writing, it’s tough when an outlet promises to pay and you budget around that promise. Contracts are always good to have in place. I’m running into issues with outlets wanting to repurpose content on my site without any compensation! What do you do in a situation like this. I’m a highly experienced writer, with great credentials, so “lending” my already written work on my blog in order to fill your magazine is not beneficial to me. Or is it? Any suggestions from you writers that may have experienced same “offers” from outlets?

    Great article.

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