Saving Money As A Freelancer: Best Money Practices

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Freelancing has its perks: flexibility, the “be your own boss” arrangement, and the opportunity to work with lots of different people. However, you can’t have the yin without the yang: the inconsistent income; the added pressure of paying your own pension; and the likelihood of not being invited to office Christmas parties. So, what are the best money practices for freelancers?

So, when you don’t have a reliable salary, what is the best approach to a long-term plan for your finances?  

We’re here to talk about how to maximize your life savings as a freelancer, and discover what the very best money practices are.

Ready? Let’s take a look…

 Adjust your mindset

Before you can use practical methods, you need to make sure you have the right mindset about your money. If a global pandemic were motivation enough, having backup funds is very important, particularly for freelancers. 

It’s common to think of saving money as just less money to have fun with now, but really, it’s just money for your future self to enjoy. You aren’t losing your money by saving it; it is still your money. 

As a generation that is often denoted by instant gratification – yes, saving isn’t as fun as spending – but delaying, makes the satisfaction of spending it that much more significant.

Figure out how much you can afford to actually save first

You can often see a big spike in income when you start freelancing, but what are you going to do with it all? Remember, you don’t have a pension, sick leave, or holiday pay anymore. When it comes to the best money practices, you can’t save what you don’t have, so step one involves auditing your ingoings and outgoings. 

Exercise a bit (or a lot, if you’re like me) of self-discipline when segregating essentials from luxuries, no matter how much you think you need Amazon prime; essentials include your mortgage or rent payments, bills, basic food needs, and any transport. 

Deduct the sum of the above from your pay, and what you’re left with is your disposable income. Determine how much you can comfortably live on and set the rest aside. 

Or, think about your money in terms of paying yourself. Could you live on 90% of your current income? What about 80%? If so, make it happen and save the rest.

Tools and apps, like Chip, calculate how much you should save based on your spending behavior and automatically move it aside into an account with the best returns.

Having a separate account from your main bank account also keeps you from being tempted to spend.

Get into the routine of having a routine

Creating as much structure in a structure-less work environment will make developing good money habits a lot less difficult.

Try giving yourself a salary, and pay yourself based on that figure each month.

Check out Glassdoor or do a quick Google search of your average income for your industry online to gauge what a realistic salary looks like for your role.

Put more money away during months or jobs where you earn significantly more than the average, but avoid “lifestyle creep,” the automatic thing we do when we earn more money.

To help with this, set up a direct debit when you know the date you are due to be paid.

In a similar way, Chip’s Payday Put Away feature keeps track of when you get paid and automatically sets that money aside.

How to use your VIP pass to unlock 1.25% on savings

1. If you haven’t signed up yet

If you’ve downloaded Chip but are yet to complete the signup journey, you’ll find the last page of the sign up process will ask if you have been invited by a friend and prompt you to type in your passcode (TW1N3P)

2. If you have signed up, but didn’t use your code

If you skipped the prompt, don’t fret. Simply head to the ‘Profile’ tab within your app and find ‘Enter VIP passcode’.

You’re done – you can now start automatically earning 1.25% return on your savings!

Those were the best money practices for freelance professionals to share. Any other ideas? Don’t forget to let us know your best ideas for running a successful business.

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