Becoming a full-time freelancer can be very rewarding, enabling you to be your own boss and follow your dreams. The downside of this transition from working a “regular job” to freelancing is that it can sometimes be financially challenging. When beginning of your career as a freelancer, work and income are often spotty, sporadic, and unpredictable. It takes time to build a solid client base that lets you command the freelancing rates you need to supply the level of income you want or need. You can make the transition a lot easier by first saving up enough money to fund several months of living expenses while you establish your freelance business. Having money in the bank prevents worry over your ability to pay your rent or mortgage and other bills, providing you with some basic financial security. It also relieves you of feeling severe financial pressure as you increase your work portfolio and carve out your niche in the world of freelancing. This lets you be more choosy when picking projects and clients. You can also fare better in rate negotiations when you don’t feel a desperate need to take any work you can. Here are five ideas to help you bank the money you need to launch your career as a freelancer.
Identify Your Needs and Wants
The most basic first step in creating a savings fund is taking an honest look at your current financial state and monthly budget. Many people are very surprised the first time they really analyze their spending. Let’s say you pay $2.50 each for two cups of coffee every workday. That adds up to more than $125 a month, assuming you work five or six days a week. If you cut out just one of those cups each day, you can bank over $60 a month. Next, take a look at your monthly expenses and determine what you spend on actual needs and what goes to optional luxuries. You may actually need cable TV and broadband internet service, but you probably don’t need all the premium movie channels. Wine with dinner likely isn’t a necessity, and even if you decide it is, you can probably get by with spending a bit less per bottle. You don’t have to cut yourself down to bare subsistence living — you just need to cut down on some luxury expenses. If you can reduce your monthly spending by $200 overall, you can save up $1,000 in just five months.
Sell Some Things You Don’t Need
Look through your house, including the closets, attic, basement, and garage, to see if you have things you don’t use that you can sell on eBay. Through the years, nearly all of us have collected sizeable piles of stuff we no longer need. Maybe you have a guitar or other musical instrument you don’t play anymore, and you may have replaced a DVD player with a newer, better model, but still have the old one just lying around collecting dust. You might even have some valuable collectibles such as gold or silver coins you are willing to part with to fund your new small business as a freelancer. If nothing else, you probably have at least a few books you can sell to a bookstore that buys used tomes.
Make Saving Money Automatic
You can help grow your savings account by finding some ways to make saving money automatic. One tried and true tactic is saving your spare change in a jar. Just make it a habit to drop in any coins left in your pocket at the end of each day. You can supercharge this effort by going out of your way to put more change in your pocket. When you pay cash, avoid paying the exact amount. Instead, purposely give the cashier only bills, ensuring you receive some coins back to go in your savings jar. There are even automatic money saving apps such as Acorns that automatically save money for you. Whenever you make a debit card purchase, the app automatically transfers the amount of money up to the next even dollar amount into a savings account. So if you spend $1.50, the app automatically transfers 50 cents to your savings account.
Use Barter or Trade
The practice of bartering or trading, once widely used in everyday commerce between individuals and businesses, has returned to popularity in recent years. You may be able to save a considerable amount of money on major purchases or minor repairs by bartering rather than paying cash. When you need something, explore the possibility of exchanging goods or services instead of paying with currency. This may even provide an opportunity to build up your freelance work portfolio if you can pay for something with your services.
Reduce Interest Expenses
If you have a significant amount of debt, either as a mortgage, auto loan, or credit card, check your interest rates to see if you can get them reduced. You may be able to refinance a home mortgage, home equity, or auto loan at a lower rate that drops your monthly payments. With credit cards, you can contact your card issuer and ask to renegotiate a lower rate, or check credit card offers to see if you can get a new card with even lower rates. If so, you can then transfer all or part of your outstanding balance on higher rate cards for extra savings. Saving up money to fund your transition to full-time freelancer can make your career move much easier. With just a little thought and effort, you can pile up a substantial amount of savings in a fairly short span of time.