Freelancing can be a risky profession if you don’t have the necessary experience for budgeting. Irregular income can make maintaining your budget and reducing expenses a nightmare task. It is a situation where one day you have enough money to splurge; the next few days, you are left with none.
The reality is that as a freelancer, you need to learn how to micromanage your expenses. It isn’t about when you start or how far you are in freelancing either. It is about facing the tough reality of increasing prices and getting luxuries.
As daunting as it may sound and feel, it is still a necessary task that many freelancers fail to accomplish. But it is not as easy as it might seem, since you are working on your own time while also trying to complete your personal ambitions. For people who live assignment to assignment, managing, saving, and utilizing irregular income is difficult.
Thus, if you are a freelancer looking for some budgeting tips, below are some top tips to help freelancers to reduce their household expenses.
1. Save On Office Costs
Either you are familiar with or must have at least heard about it. But a lot of working professionals are working from coffee shops and café’s providing internet connection. This helps you in saving costs of building a home office.
Alternatively, you can look for places such as public parks with good connections as well. Another popular tip regarding this is to simply buy or rent furniture. Due to the pandemic, doing this has been popular and affordable as well. You can buy refurbished tables and chairs to set up your office.
2. Prioritize Your Expenses
A careful mix of luxury and necessity is important when it comes to freelancing. While on a project, you can probably splurge a little. On other days, you need to prioritize bare necessities.
The reasoning behind this is simple. Suppose you are not certain about your next project. Prioritize on saving. You can effectively divide your income to save for future expenses and set aside an amount for present needs.
Thus, instead of going to a physical escape room, you can go for online escape rooms or make one at your home with your friends. Save wherever you reasonably can; if you have money to spare, then why not go for the real thing.
3. Expenditure Limits
One of the good ways to maintain your expenses is to use an excel spreadsheet. The rule is simple. You note down your expenses and income, you note down the savings you need, and then set an expenditure limit.
This will help you in knowing what kind of expenditure you are making and where you can limit your expenses. Tracking your expenses is the best way to limit your expenses. Since limiting what you don’t exactly know will not help you.
4. Plan Your Travel
Traveling is by far one of the most expensive things you need to reduce your costs. Whether it is intercity travel or just holiday traveling, traveling as a freelancer is a tough thing unless and until it is sponsored.
Pandemic has taught us how to combat these expenses. If you need to go for a meeting, a video call would be much more economical. Depending on what others might prefer, you may or may not save on it.
However, you can save on some other traveling expenses as well. The biggest is the travel and holidays. Plan your budget around these trips so as to allow you to manage your savings and income. Unplanned and reckless handling of expenses will cause you to lose control of your budget very quickly.
5. Maintain Your Savings
This might sound weird but maintaining your savings is one of the most difficult things to accomplish. Not only do you have to ensure that you are allotting a good chunk of your income to a savings account, but you also have to ensure minimal withdrawal from it.
Ideally, you can set up two types of savings. One will be your short-term savings, while the other is your long-term savings. The short-term savings will help you plan things such as escape room parties, holidays, and extravagant purchases. While long-term savings will help secure your retirement.
6. Maintain Separate Accounts
Even if you are just starting your freelancing career, you should start the process of setting up a business account immediately. You should not mix your personal account and business account.
Doing so will help in tracking your business income, expenditure, and savings. You can easily manage and limit your expenses if you have two separate accounts instead of one. A lot of people do not feel the need to do so, but you will only end up confused or delusional about your money if it is all in one account.
7. Go for that Home Brew
If you are someone who can’t work without your daily caffeine intake, then make sure you make coffee at home. While coffee does not cost much, the expenses just pile on until you are left with nothing.
More often than not, we also end up eating and buying more when we stay out. Thus, if you work from cafes and coffee shops, ensure you don’t splurge on refreshments and food items. Having meals at home is a great way to save a lot of money.
8. Dynamic Budgeting and Investing
You don’t need to stick to a simple budget plan forever. As a freelancer, your income varies with your project. This means that you will need to start making dynamic budget plans that revolve around your present situation. Have a work-less period coming up? Start saving more. Got multiple projects lined up? You can increase your expenditure limit.
You can also maintain this approach when investing. While you always have to be careful while investing, you should reconsider it when your income is particularly low. Smart investments and trading will lead to higher returns.
Conclusion
Freelancing is a tough job in itself. Working on your own accord, you need to learn a lot of discipline while doing so. It is also important that you identify and acknowledge your inability to do so. This is when you seek professional help. As a bonus tip, let a professional accountant help you with this.
With the above 8 top tips on how to reduce your household expenses, you will be able to save a lot. Determination and discipline will be the key to maximum effect. Remember, budget plans depend on individual needs. Thus, see which one works for you.
Author’s Bio: Sophia Scott is a content creator at escaperoom.com. She’s a passionate young woman, mother to an amazing nine-year-old, and an avid reader. Over the years, writing has helped her explore and understand the world as well as her own self. She loves to travel, meet new people, and spend quality time with her daughter. You can find her on LinkedIn.
