Getting By On a Freelancer’s Budget
March 12, 2010 – 7:07 pmIn these days of economic turmoil, many people are turning to freelance and contract work to pay their bills. While freelancing offers workers a flexible schedule and the convenience of being their own boss, it has some drawbacks. According to a recent article in Money magazine, many freelancers are finding it difficult to transition from the security of high paying corporate jobs to the instability of lower paying freelance jobs.
Freelancers don’t have the benefit of company-sponsored health coverage or paid vacation days. In most cases, freelancers have to put up some money upfront to properly equip their home office and cover operating costs. To make matters worse, as a freelancer your income depends on your client’s prompt payments. One late payment can throw off your monthly income and can put you in a pinch when it comes time to pay the bills. So how do freelance workers survive off their diminished salaries?
When you make the transition from full-time to freelance work, you have to adjust your attitude toward spending and saving. You have to get used to living on less and develop certain strategies to help you survive tough times. Here are some tips on how to make freelancing work!
- Create a Cushion: The first step to financial security for a freelancer is to build up an emergency fund with four months of living expenses. This way you can pay your bills even if your client pays a little late.
- Take Advantage of Tax Breaks: As a freelancer, you can write off many of your work-related expenses. Keep track of all your deductions including your business supplies, phone lines, Internet access and even health insurance premiums.
- Contribute to an HSA: Affordable health insurance is harder and harder to come by. So in order to help you save for any future emergencies, contribute a couple hundred dollars every month to an HSA.
Andrea Hart is a freelance writer, a student, a teacher, a wife and a mother to two rambunctious boys. She currently resides in Southeastern PA.
7 Responses to “Getting By On a Freelancer’s Budget”
I don’t think freelancing has to mean less money- though you’re right, for many it does. The other challenge is that the income is by nature not steady, so one has to get into the habit of putting it away when there’s enough to do that with, so there will be some for lean weeks.
The 4 month cushion is a good point if one can do it, but in the beginning the challenge might be more about managing the income wisely. Good points about the tax advantages Andrea.
By Tim on Mar 16, 2010
My husband does freelance writing and editing on the side, and always writes off whatever he can. I run my own Scentsy business and we both have to figure out what to apply to what. At least I don’t have to worry about waiting on payments!
By AuthenticCandleWarmers on Mar 16, 2010
Any tips on how to get started? Thanks.
By jacqui on Mar 20, 2010
Hi Jacqui,
Have you heard of the Local Influencer Program(localinfluencer.com). There was a post about it in the wahm.com forums and I was wondering how legit it was(post- http://www.wahm.com/forum/telecommuting-moms-34/490316-i-got-my-check.html).
By Rafa Soler on Mar 23, 2010
hi,
where do you live in so pa, i live there also, i am looking for a work at home job, can you help?
By laurie on Apr 15, 2010
Great post! I currently have a full time job but also use my free time to do freelance work. It’s getting to the point where I must decide if I want to do freelance work all of the time or do my full time job all of the time. It’s a big step and there is a lot of things to consider. Thanks for the information in this post. I think any freelancer should create a cushion before stepping out full time on their own!
By Tony Oravet on Aug 6, 2010
I do freelance proofreading work and thankfully haven’t had any problems with late payments (or no payment). However, most of my work is for companies that issue checks on an established schedule. Late payments may be more of an issue when working with individuals.
By Amber on Aug 17, 2010