How Freelancing Actually Makes Me Better with Money
Freelancing isn’t a get-rich-quick scheme by any means. In fact, you’ve gotta be prepared to make some sacrifices and take some hits in order to get a freelance biz off the ground—and then to keep it running, month after month after month.
Our budget changed dramatically once I went down to part-time at the office job. When half your income comes from freelancing, there are a lot of extra things to consider—the instability of clients paying you at different times of the month rather than a steady paycheck every two weeks, the enormous hit the tax man takes on any self-made income, not to mention the emotional and physical adjustments that come from working from home.
That said? I have to say that I am more financially responsible, and our budget is in healthier shape, now that I’m a part-time freelancer than I ever was when I was a full-time 9-5er.
I am forced to be more careful with my money.
When you have income dribbling in at different times of the month, you don’t get to have that sense of invincibility and la-ti-dah disregard that a regular paycheck gives you. You need to time your bill payments more carefully, keep more money in reserve to cover the slow periods, and think twice about splurging because your one big paycheck of the month is still a couple weeks away from arriving.
Not to mention the aforementioned Wrath of the Tax Man. When you know that 1/3 of every dollar you’ve hard-earned with your hustling is going straight to the IRS, it can make you much stingier about spending those dollars. Unlike a regular salary that comes in on schedule with no extra effort on your part (with the taxes already deducted so you don’t have to really think about it), working your tail off to secure and fulfill a freelance assignment, and then waving bye-bye to 1/3 of your compensation as soon as it comes in, gives you a newfound sense of appreciation for the value of your money.
I’m putting away more.
Our savings was non-existent when I was working full-time, in spite of the fact that I was making a fairly decent salary. Why? Because the money was magically direct-deposited into my account, I spent it, and I never had to sit down and think about it.
When a freelance payment comes in now, I have to take the time to calculate 1/3 of it, put that 1/3 immediately away into my new freelance tax payment account, and then put the remaining amount into our normal checking account. Getting into the habit of putting money aside, even if only for a tax payment, has made my budgeting more conscious.
In addition, our monthly budget is still the same as it was when I first started working part-time. I’ve gotten several new freelance gigs since then, meaning I’m bringing in more, but rather than fall into the lifestyle inflation trap, I’ve dedicated myself to putting any excess immediately into savings. This saves us in the months when work is a little slow, and it also keeps us from having to charge anything to my husband’s cards when an emergency (like a car repair or a vet bill) crops up. Over the past few months, we’ve covered several unexpected expenses with my freelancing spillover, and it’s felt fantastic not to have to bring out the plastic.
I can drum up more money when needed.
I’m going to visit a friend in D.C. at the end of February. This, obviously, is not in our budget. But I e-mailed a current client asking if I could pick up a few extra posts for the month, and she agreed. In fact, as long as she was thinking about it, she also offered me a new gig writing for another site she owns—which means that in future months, I’ll have even more spillover to add to our growing savings!
When you work for a salary, you make what you make. You could get a second job if you need to pick up some budget slack, but that can be exhausting and can seriously affect your personal life and health. (I know. There was a period when things were tight and I went from my 9-5 to a 6-11 several days a week, and it wrecked me.)
When you work for yourself, however, the sky’s the limit with how much more you can hustle. I picked up the pace around Christmas to help cover our gift buying. I’m putting in some extra hours on my Tuesdays and Fridays to build up the fund for my D.C. trip. Adding a few more tasks to the work you’re already doing is much easier than adding an entire second shift, with different responsibilities and a different frame of mind to get into, to the one you’re already doing.
Plus there is nothing like knowing that if we need to save up for something, it’s within my power to make it happen. I no longer have to be terrified of everything falling into the red if something unexpected comes up. I can give myself and my husband an occasional treat without having to drastically slash our grocery or medical budget for the month. I am very tangibly aware of the correlation between my work and my income—which, yes, can be absolutely petrifying at times, but also fantastically empowering.Like my style? It can be yours--literally! Check out the services I offer here: Bloggity-Blogging Goodness for Hire