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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
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