Saving With a Variable Income: Yes, Freelancers, It Can Be Done

By Bethany Johnson, Contributor, on June 20, 2017

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About five years ago, I was living paycheck-to-paycheck and feeling hopeless about the future. My variable income made it difficult to save money for more than a few weeks at a time. Even when I successfully built up a cushion, it disappeared in the natural feast-or-famine cycle of freelancing.

I wanted nothing more than to start investing for the future, put away a portion each month for my kids, or even just lay down the foundation to an emergency fund. You know, the common hopes and expectations we all have. But I couldn’t. It grieved me to feel so restricted. It was like being financially handcuffed.

Believe it or not, looking back, I’m glad we struggled. I learned a certain scrappy resourcefulness during that phase that cannot be taught in a classroom or by reading someone else’s story. Today, my variable income is entirely expendable because of how I handled the mental battle of having nothing. Here’s what I learned.

The Hard Truth

Unfortunately, there are no shortcuts. In fact, there are only two ways to escape the paycheck-to-paycheck lifestyle: You either need to boost your income, or cut spending. Preferably both.

Great news: There are tons of ways to increase your rate of saving while you earn more and more as a freelancer. Here’s how.

Earn More

  • Start with what you make. If you have a solid history with your first few freelancing clients, it may be time to raise your rates. Assuming you built rate-raises into your contract, taking action is easy. Simply let your current clients know the time has come.
  • Get referrals. Not comfortable boosting your rates quite yet? Ask your current clients to hook you up with other similar contacts in decision-making positions. This is the number one way I filled my roster of well-qualified, high-paying customers last year. To this day, referrals continue to roll in unsolicited.
  • Skill up. Diversify your offerings by taking a free class or raiding your local library’s stash of educational materials. Choose a diversification strategy that will support your relevant skill set. According to PCAge Career Institute, there are some tech skills that, when applied to freelance careers, command higher pay than the rest.
  • Earn a certification. Boosting your online credibility is one of the best ways to earn more as a freelancer with variable income. And there’s nothing better than an industry-recognized badge to show prospective clients your talents, skills and stick-to-itiveness.

Cut Spending

  • Set a business budget. Most people know that a personal budget can help you achieve financial goals, but have you established a business budget? If not, this is the best move to make today.
  • Consider having supplies delivered. Yes, at first this sounds like a luxury expenditure. But, as a freelancer, you’re a digital nomad. And while that sometimes works in your favor, you can also end up spending more time and money running errands when you could be cranking out paid assignments. Calculate how much it would cost you to run to the office supply store or local grocer. If you could make more by staying in your desk chair, then order what you need.
  • Stay healthy. Two years ago, I cut sugar completely out of my family’s diet. Not only did this save tons of money on the grocery bill, I found my mental capacity and creativity took flight. I’m more agile, insightful, creative and resourceful than ever, and that’s because my brain responds to regular exercise, good sleep and solid nutrition. Plus, the kids are more focused and capable of thwarting common ailments that used to take time away from work and play.
  • Save when it hurts. Yes, squirreling away cash when you’re nearly broke can help you cut spending. When you force yourself to allocate savings before anything else, you’ll see how quickly it builds up and can be invested. Grab my favorite book on the topic, “Profit First” by Mike Michalowicz, to learn more.

As a freelancer, you have an advantage. You’re in a unique position to save cash for the future, even when your situation seems bleak. Take the steps above and set a reminder to check in after a month. Revisit to see if your tactics worked, and you’ll be delightfully surprised.

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