Many people choose freelancing as a profession because of its many perks. They can decide their own work hours, work from home, and make money doing what they love. Freelancing can pay well and contribute to a stable work-life balance. However, one of the toughest parts of being a freelancer is tracking your savings. For freelancers, their exact income every month is unknown and variable. This can pose an issue when it comes to budgeting and keeping aside money for savings. Here are a few tips for freelancers and other self-employed people to help them maximize their savings.
#1 Use an expense tracking app.
We often think that we have a vague idea of how much we spend. But in reality, there are a lot of small expenses here and there that we forget to account for in our head. Over time, these add up and can leave a significant and unexpected dent in our wallet. It’s best not to rely on our memory. Get an app that can track expenses, deduct the amount from a preset budget, and point out unnecessary expenditure. There are some apps that can be linked to your credit card, and they automatically record any purchases.
#2 Do some basic data analysis.
Since freelancers don’t know exactly how much they are earning each month, it is best to aggregate data from previous years and do some analysis to figure out the mean expected income. From this, it is possible to project future earnings and budget accordingly, as well as build scenarios for extreme situations.
#3 Set up a savings pot.
It is good to have a long-term savings account in a bank. It is a smart decision to supplement this with a secondary savings account for short-term savings, where you can put away a small amount every day, week, or month. There are apps for this, and many digital wallets also have this feature. This way, there is a small emergency amount saved up for any unexpected expenses that accrue over the month, such as repairs or replacements.
#4 Seek consultation for smart saving strategies.
To make sure that you are taking advantage of every opportunity and scheme for tax savings, set up an appointment with a company that can offer you tax strategy help. If you live in Utah, find a local company as it will be most familiar with your state taxes and incentive programs.
#5 Invest wisely.
Instead of leaving your savings laying around in a bank account, use it to invest wisely. There are many companies that can help you build an investment portfolio with just as little as 1,000 dollars. You will have the option to choose what kind of stocks you wish to buy. You can also choose between relatively safe and stable ones or high risk and high payoff ones.
Being a freelancer doesn’t mean that your finances have to be left up in the air. With careful planning and by using financial resources smartly, your income can be stabilized, and all expenses can be factored in, just as with an office job.