If you’re a full-time freelancer or just do it as a side hustle, you’ve likely experienced life with an irregular income and you know the importance of proper budgeting. During lean times, you must embrace frugality to save money, avoid debt, and keep your dream of working for yourself.
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To protect yourself and your finances during those leaner cycles, follow these 10 tips from frugal freelancers.
Keep Expenses Low
“Frugal freelancers always work to keep expenses low while maximizing income,” said Eric Rosenberg, freelance writer and founder of Freelancer Dashboard. “That could mean avoiding expensive invoicing systems in favor of a do-it-yourself approach. While investing in tools and technology is important, finding the right balance and avoiding extra subscriptions can lead to long-term savings.”
The most important thing a frugal freelancer will do is keep their expenses low to prepare for expected income fluctuations.
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Use the Free Version of a Tool
Freelancers will have tools that help them run their businesses, and they’ll often try to get the most out of the free version before spending money on the premium product. This trial period will help them determine if they truly need this tool for business operations.
“Frugal freelancers will try to use the free version of a tool to test it out and see if they can stay within the monthly limits,” shared Sandy Yong, personal finance author of The Money Master.
Eliminate Fees Whenever Possible
“Frugal freelancers will find ways to cut out unnecessary fees,” noted Yong. “For example, trying to avoid transaction fees when accepting payments and paying invoices.”
By eliminating unnecessary fees when collecting payments or performing services, frugal freelancers keep more of the money they earn.
Look for High-Paying Clients
Since frugal people value their time, they tend to shy away from low-paying clients and focus on higher-paying ones. Frugal freelancers understand that to run a business, they need clients who pay them a fair rate.
Outsource What They’re Not Strong In
“As an accountant, one thing I find freelancers doing–or not doing–is paying professionals to do things they shouldn’t be doing themselves,” said Eric J. Nisall, a tax accountant who works with freelancers. He listed things like their accounting, legal documents, and podcast pitching when discussing tasks that freelancers should outsource so that they can focus on growing their businesses.
Nisall added, “If you’re just starting out, you might not have the budget, but if you’re established and make a good enough profit, you should be outsourcing as much as you can. That way, it frees you up to spend more time on income-generating tasks.”
File Taxes Quarterly
Frugal freelancers understand the importance of taxes and know they must prepare for this expense. “Putting away your tax payments every three months means you’ll be able to afford your payments when quarterly taxes are due,” said Scott Lieberman, founder of Touchdown Money. “You’ll also have a better idea of how much money you need to make.”
Stick to a Budget
Creating a budget that allows them to plan for their expenses to stay on top of their finances is a hallmark of frugal freelancers. “Sticking to your budget allows you flexibility when expenses come up,” noted Lieberman. If nothing does, put the extra money in savings and treat it like you’re giving yourself a bonus for good work.”
Have a Salary
By paying themselves a “salary”, frugal freelancers can save for the future and have money to reinvest in their business when necessary. “Your salary is basically the money you’ll put in savings each month,” expressed Lieberman. “This is money you’ll set aside from your profits and your tax obligations to ensure you’re putting money away.”
Keep Track of All Receipts
Frugal freelancers track all of their receipts to claim all relevant business expenses on their taxes. Freelancers must stay organized and diligent with all their costs to know where their money is going.
Avoid Free Work
As a freelancer, you’ll be given many opportunities to work for “exposure” instead of financial compensation. While you may have to do this when starting, experienced freelancers shouldn’t be trading their time in for free.
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This article originally appeared on GOBankingRates.com: 10 Things Frugal Freelancers Always Do
Source: 10 Things Frugal Freelancers Always Do
