It is hard for full-time job owners with a steady income each month to save money. However, it is even more challenging for freelance workers or self-employed person to save money for future use due to variation in income. For instance, freelancers earn more during high seasons but earnings reduce during low seasons. It can be challenging to save money because your expenses do not go by a similar pattern.
As a freelance worker, you lack the advantages of pension programs that would allow you to deposit money automatically as your savings every time you are paid. The good news is that you can save enough money for your future even when you have an unstable income. What you need is careful planning and calculating the amount, you need to save each month (save more during high seasons to compensate for the low seasons).
How to start saving
First, you must be realistic about your future. Being a freelance worker/writer gives you the ability to work for the period you want. However, you must be realistic because you are not different from other people. You must be realistic about the period you will work, and the amount of money you will need to save to enjoy your life in future. You must keep money aside for emergencies and for your future projects or investments.
Catch up on the savings culture
You must save at least 8 percent of your income each month in your 20s and 10 percent in your 30s to save enough money for future use. Many of us have not done this because of the variation of our incomes. If you are one of them, this is the time to start saving. Do not worry if you had done mistakes in the past regarding your savings. The past is gone now, however, you have the time now to start saving. You should examine your expenses to ensure that you are not wasting your finances each month.
In your savings, ensure you also have an emergency fund and a holiday fund.
Since you are a freelancer, you do not have a vacation leave and thus you ought to have a holiday fund that is designed for the freelance lifestyle to ensure that you also enjoy holidays of your choosing. Once you have established a holiday fund, you will not be tempted to touch your savings because you will have the means you need to get you wherever you want when you are tired or want to relax your mind. Establish a holiday fund that can support you during those periods. In turn, this will enable you to deal with many challenges as a freelancer.
Besides, you also need an emergency fund savings to deal with unforeseen events in your life like delayed payments, low season, etc. Your holiday and emergency fund should be separate from your savings. Consequently, you can use the 50:30:20 formula in which you save 20 percent of your income every month where 10 percent goes to the savings while the rest goes to the holiday and emergency fund. You can add based on your income and needs. However, you must ensure that the 20 percent is the minimum.
It is time to organize your future.