Freelancing, whether as a full-time career or a side hustle, comes with its fair share of financial challenges. One of the most significant hurdles freelancers face is managing an irregular income, which can lead to periods of feast or famine. To navigate these ups and downs successfully, frugal freelancers have developed a set of strategies that help them save money, avoid debt, and keep their entrepreneurial dreams alive.
At the core of a frugal freelancer's financial strategy is the principle of keeping expenses low while maximizing income. Eric Rosenberg, freelance writer and founder of Freelancer Dashboard, emphasizes the importance of finding the right balance between investing in essential tools and technology and avoiding unnecessary subscriptions. By opting for do-it-yourself approaches or using free versions of tools, freelancers can save money in the long run.
Sandy Yong, personal finance author of The Money Master, notes that frugal freelancers often make the most of free versions of tools before committing to premium products. This trial period allows them to determine whether a particular tool is essential for their business operations, helping them avoid unnecessary expenses. Additionally, frugal freelancers are always on the lookout for ways to eliminate fees, such as transaction costs when accepting payments or paying invoices.
Another key strategy employed by frugal freelancers is focusing on high-paying clients. By valuing their time and expertise, they tend to shy away from low-paying gigs and instead seek out clients who are willing to pay them a fair rate. This approach ensures that they can generate sufficient income to sustain their business and personal needs.
Outsourcing tasks that they are not strong in is another hallmark of frugal freelancers. Eric J. Nisall, a tax accountant who works with freelancers, emphasizes the importance of paying professionals to handle tasks such as accounting, legal documents, and podcast pitching. By delegating these responsibilities, freelancers can free up more time to focus on income-generating activities and grow their businesses.
Taxes are an essential consideration for any freelancer, and frugal ones are no exception. Scott Lieberman, founder of Touchdown Money, advises freelancers to file their taxes quarterly and put away the necessary payments every three months. This approach ensures that they can afford their tax obligations when due and have a better understanding of their financial situation.
Sticking to a budget is another crucial aspect of a frugal freelancer's financial strategy. By planning for their expenses and staying on top of their finances, freelancers can maintain flexibility when unexpected costs arise. Lieberman suggests that if no such expenses occur, freelancers should put the extra money into savings and treat it as a self-awarded bonus for their hard work.
Frugal freelancers also understand the importance of paying themselves a "salary." By setting aside a portion of their profits and tax obligations each month, they can save for the future and have money to reinvest in their business when necessary. This approach helps them maintain financial stability and ensures that they are consistently putting money away for their personal and professional goals.
