This will give you some breathing room if work dries up, you get a short-term illness, or just need to take a decent break! A bigger reserve will buy you more time, so choose a reserve that you feel comfortable with.Ī further benefit of tucking away your tax payments as you earn, is that you’ll also have a large pot of cash to draw from if you hit any cashflow crunches, where you know you’ll get paid to cover what you borrow, but you’re still waiting on clients to pay your invoices. Ideally this would be at least enough to cover a full month of all your outgoings. Having a cushion under you when you fall on those proverbial hard times, really helps to soften the blow. First, and most obviously, they give you some protection against the unexpected twists and turns that freelance life brings. Over the course of a freelance creative career, savings serve multiple purposes. So pick a realistic percentage you can set aside as savings every time you get paid. I’ve seen too many freelancers fall into a panic when it comes time to pay their taxes because they’ve not stored away (in a separate account) the correct percentage they need to cover this inescapable expense. If it’s all in one account, it doesn’t really matter if you’ve tallied somewhere that some portion of it is supposed to be savings, it’ll all turn into financial soup and will get spent before you know it. I’ve also found that, when it comes to the practical mechanics of saving, it’s better to have separate accounts to move different portions of your income into. I prefer to use percentages to slice and dice my income-rather than a set monthly amount-because the total amounts I then save, invest, give etc., will automatically scale as my income increases. Saving often can protect you against the unexpected. Eventually it will all add up and consistently saving something helps to build that crucial habit into your financial life. Always be saving something.Įven if it’s a tiny percentage of your income. If not now, then maybe later.Īs in the edit suite, so in life. So if freelancing is something you’ve chosen or recently fallen into, or if you’re just considering the jump, then there’ll be (I hope) something in these personal experiences that you find useful. I’ve made mistakes, I’ve learned valuable lessons, and along the way I’ve landed on a system that’s helped me manage my finances through a financial crisis, two babies (and another on the way), a global pandemic, and the industry’s constant leaps in technology.įreelancing isn’t for everyone, but I can’t imagine giving up the freedom, flexibility, and entrepreneurial agency that it offers. But I’ve also seen boom times where I earned more than I ever thought likely. There’ve been long stretches of unemployment, especially at the start. I’ve never had a proper job-and by that I mean, a salaried position, with a boss and the assumption of constant work-but so far it’s worked out alright. Before acting on any information, consider your situation, objectives, and needs, and seek professional local help. Editor’s note: This article is intended to be general in nature and is not personal financial advice.
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