The freelancer’s guide to saving money

The future is unpredictable. In the event of an emergency, one must have enough money not only to meet the emergency but keep one’s finances in harmony even after meeting them.

Money management for freelancers can be especially difficult given their irregular income. They have to take more efforts for saving money than a salaried person. Consequently, the way in which they save money has to be unique. Below is a simple guide for doing so:

1. Create spreadsheets

Before you set out to save money, it is important to analyze your income and expenses. Create a freelance income spreadsheet for tracking how much money you are earning per month. In the same spreadsheet, add a section for monthly expenses.

This will help you to weigh your expenses against your income and give you a better picture of your finances. Observe the spreadsheet and think about what expenses you can eliminate to save money while freelancing.

2. Segregate

If you want to save money while freelancing, keep your savings safe and undisturbed so as to keep from spending that amount towards your expenses. For doing so, maintain an account exclusively for your savings.

Decide a certain percentage to save from your income every month, say 20% and add this amount to your account. On the months you earn more than you usually do, raise this amount to about 40 %. In the long term, this amount will be huge in itself.

3. Minimize your expenses

If you decide to allocate a certain percentage of your income to savings, you will naturally be left with a lower amount to spend. It will also apply to months when you will earn lesser than usual. Hence, to save money while freelancing, it is crucial to get into a habit of minimizing your expenses.

Figure out the areas where you spend incessantly and the products/services you can do without. Cut down on these expenses and you will be surprised by how much money this simple step will save you.  Minimalism is the key.

 4. Use alternatives

Use CFL bulbs instead of the regular ones and invest in energy star appliances, they give more output with less power. Some devices are said to suck up power even when the switch is off but the device is plugged in, this phenomena is also called phantom energy load. Plug off the devices, this will utilise 6 % less power.

Many products you buy are expensive only because of their brand value while having no significant quality edge. Go for cheaper brands. In case of food, go for local, fresh produce and not exotic imported ones.

5. Invest

It is not enough just to save money while freelancing. Assign a certain percentage of your savings towards investments. This will lead to long term wealth generation.

Everyone has a different capacity of investing. One of the most doable forms of investments is deposits which require a monthly fixed amount to be paid. Add this data into your freelance income spreadsheet and make this a monthly ritual for making the most out of your savings.

6. Generate wealth

Money management for freelancers can become easier if they find additional ways to generate wealth. Sell off old, unused goods. Cut off unused subscriptions. Take cabs instead of owning a car and spending on its insurance and maintenance.

Buy products you need more at wholesale prices. Sign up for wallets and credit cards that offer discounts, cashbacks and freebies. Buy insurances only after analysing the risks or settle for a low monthly premium.

At the end of the day, it’s all about saving for the future and keeping your grounds covered.

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