FREELANCERS UNION BLOG

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Are you ready for a rainy day?

According to a report by MagnifyMoney, the median American household has $11,700 in savings.

While these statistics are not exclusively about freelancers, they still paint a not-so-rosy picture. Because unlike employees who are paid weekly, bi-weekly, or monthly, being self-employed does not guarantee steady income or the same amount of income every month. Freelancers must also depend on timely payment from clients, and meeting project benchmarks to cover expenses.

So with so many variables beyond our control, how can freelancers prepare for a rough patch? Here are some things to consider.

Scrutinize your expenses

Certain things like a car note, mortgage, food, and utilities may be non-negotiable. However, if you track your spending, you may find that there are some hidden costs that are eating away at your reserves.

Do you rely on food or grocery delivery services like GrubHub, UberEats, Peapod or DoorDash? Having someone deliver items to your door is a convenience that adds up, so try to resist the "order" button. It's an easy short-term sacrifice for long-term gain.

Talk to your bank

Are you getting the best rates on your credit cards? Mortgage? Office space? Here is where you never know if you don't ask comes into play.

Although banks and lenders can feel like large, faceless entities, they may work with you if you have a positive history of paying your bills on time. Try calling and asking for a reduced APR on your revolving credit card balances or see if you are eligible to refinance your home or car for a lower interest rate. Again, over time, the money that you save in interest charges will add up and can go straight to your savings/reserves.

Are you saving enough?

Try to save 20% of your earnings after you factor in taxes. You can do this on a project by project basis, weekly, or even monthly. The point is to create a savings habit.

Even if a project pays just $100.00, try to put away $20.00. If not $20.00, save $10.00. While smaller amounts might seem inconsequential, they quickly multiply. Just as spending small amounts erodes at your reserves over time, saving small amounts will help you to build them.

Be organized, not stressed

With financial insecurity comes stress and anxiety. By knowing that you are working towards a stronger reserve, you are, potentially, offsetting the strain that comes with rainy days or droughts.

Talk with a financial advisor about the type of savings account that will work best for you. Whether it is a means to accumulate funds for a personal or professional emergency or if it helps you to build capital, making a commitment to saving your hard earned money is a small step towards having extra cushion just in case you need it.

Tyra Seldon Tyra Seldon is a former English Professor turned writer, editor and small business owner. Her writing addresses the intersections of race, gender, culture and education. seldonwritinggroup@hotmail.com