When you’re starting out as a freelancer, it’s tough to imagine yourself saving money. Savings methods for freelancers can feel like “next level” concerns. Your focus is on earning: You need money to pay business expenses and eventually yourself. I’ve been there. But, if you start to tuck a little away, your funds will gradually build and become useful.
I remember initially stashing $20 bills into my business savings account here and there. I didn’t have a savings schedule, but the money accumulated nonetheless. It grew into a safety net for unexpected business equipment repairs and expenses. No amount is too insignificant to save.
Fast forward several years and there are three savings methods for freelancers that I utilize each month. Every two weeks when I process payroll, I make a separate transfer into a personal time off (PTO) account as well as a bank-based savings account. I also log a monthly automatic withdrawal for my retirement investing account.
3 Savings Methods for Freelancers
1. Personal Time Off (PTO)
As a freelancer, you will work more hours than you ever dreamed possible. Yes, they’re flexible hours, but they’re still busy and necessary. If you want to avoid burnout or feelings of regret, you must schedule time off to clear your mind and let your body rest.
I used to think that I couldn’t afford to take time away from my work, but by saving PTO funds to make up for that down time, it’s now much easier to justify three-day weekends and scheduling vacations. The bonus is that I’m more focused and productive when I get back to work — so I can ultimately make more money.
2. Bank Savings Account
I have a separate savings account set up at the bank where I handle my personal and business accounts. Each time I pay myself, I tuck away some cash into this account. It’s a “general purposes” savings account, used for both current and future expenses.
I find that taking a little money out of my paycheck, and tucking it away for emergencies or even planned purchases, is easier to build rather than trying to move an annual lump sum into this account.
3. Retirement Investing Account
When I started my writing business, I knew I’d need to plan for the far-off future. I did a lot of research regarding retirement investment savings plans and options. I felt that the Roth IRA was the best choice for me. I have this account set up to automatically deduct a monthly amount from my personal checking account (money that’s already been taxed). It’s nice to have this routine transaction in place because I never really see or miss the money that goes into it.
Although I have several savings plans in place, I don’t feel that they’re enough. I’ve been investigating more options to save money for both my short-term and long-term needs. I hope to start diversifying my savings with a matching savings plan, short-term investments with quick maturity and maybe an investment account that I can add small deposits to and forget about for while, but can still access, if I need to retire before my IRA is matured. Again, no amount of savings is too small. We all have to start somewhere.