When you first start out as an independent contractor, money can be tight. Money-saving strategies are key to maximizing your success when you’re in it for the long haul, but even as an established and successful freelancer, staying frugal helps you run a solid business. You should prioritize finding ways to save your hard-earned dollars every step of the way.
From budgeting and necessary, beneficial business expenses to running your own marketing and steering the ship, there are a lot of moving pieces, and knowing where to begin or how to form an effective strategy that’s right for you can prove difficult. Here are four money-saving strategies I’ve employed since striking out as a freelancer — they may help you lay a great foundation for your own business, too.
1. Keep Meticulous Records of Income and Spending
One of the easiest ways to become aware of how you’re spending money as a business is to keep meticulous records, and I mean really meticulous. Don’t discount that two-dollar coffee with a potential client the other day (and then please tell me where I can find coffee that cheap). Everything adds up, and you’ll gain a clear picture of where each and every dollar goes. You may be surprised to find out how much you spend on all the little things.
Don’t wait until the end of the year to catch up on your accounting. Making a bit of time each week will save you a lot of time chasing down receipts and trying to remember what specific expenses your credit card statement refers to.
2. Be Aware of Additional Charges and Fees
Sometimes, even receiving money from a client can cost you, particularly if you use a service like PayPal to move money. Watch out for additional charges tacked onto transactions, depending on where the money is coming from and in what currency. If you receive money in a currency other than that of the country you live in, you’ll pay an arm and a leg to convert it to your own currency when you move the money from PayPal to your own bank account.
To avoid losing more of your paycheck than you ought to, include transaction fees and currency exchange charges in your invoices. In addition to listing the cost of the work and the associated tax charges, I include a line for the PayPal fee, which I add to the total amount to be paid. This way, my client is covering the fee, not me.
3. Expense Your Expenses
As a freelancer, you can claim a certain percentage of your expenses against your income if you’re a sole proprietor. This includes a portion of rent, if you work from home; a portion of your phone bill; internet; big ticket items related to your work, like a laptop; and even some meals and entertainment. Remember that two-dollar coffee you had with a potential client? That’s a business expense, so again: Don’t discount it.
When you first start out, everything you can claim as a business expense makes a considerable difference to your bottom line.
4. Take Advantage of Your Flexibility
When you work as your own boss, you’re the one making all the decisions about how your business will function. Perhaps you only need to rent a desk in a coworking space rather than an entire office, or perhaps you only need a quiet meeting room on occasion for when clients are in town. Because more people are becoming independent contractors and working remotely, the options for finding a work space that meets your needs on a small, variable budget are becoming more plentiful and diverse. Coworking spaces are also a great place to meet like-minded indys, network and collaborate on new projects to propel you forward in your new freelance career.
Being frugal is key to successfully launching as an independent contractor. By keeping these money-saving strategies in mind, you can maximize the potential of a successful long-term career as an indy.