The No 1 Freelancing Tip for Your Financial and Emotional Success
If you learn just one lesson before you freelance, this is it: have an emergency fund. An emergency fund is a special savings account that acts as a safety net when things go wrong. If you lose a contract that you were banking on or face an unexpected tech breakdown, you can tap into these savings to cover costs and repair your belongings.
Consider this fund a buffer to protect you from financial hardship. As a backup to your usual income, an emergency fund can shield you from the stress and anxiety that often comes with unexpected emergency expenses.
How Much Do You Need to Save?
For most people, the general rule of thumb is to save three to six months’ worth of living expenses. This amount should include the essentials that you need to live (like rent, utilities, and food) plus some extra cash to handle your usual miscellaneous costs, like Internet and toiletries.
As a freelancer, you may want to bump up your goal, especially if your income fluctuates greatly between contracts.
To get the most mileage out of your cash, you should put it in a high-interest savings account. A higher compounding interest rate will help grow your money until you have to use it.
Consistent contributions will also help you reach your target faster, but don’t worry if an unexpected emergency occurs before you can save up enough. You can find online direct lenders willing to help.
In an emergency, visit MoneyKey to learn more about how cash loans online work. Unlike in-person loans that require a lengthy trip to the bank, online loans are available anywhere you get Internet.
As long as you have a secure connection, you can research and fill out an application from your couch. Since this all happens over the web, an online lender offers fast cash online applications that are simple to fill out, and you’ll find out if you qualify quickly.
An online cash loan can be a convenient failsafe for your emergency fund, but it’s not a permanent replacement for savings. Focus on saving money first, and reserve borrowing money as a backup only in unexpected emergencies.
Why Are These Savings a Freelancing Essential?
Having a solid savings account is non-negotiable when you’re a freelancer. You’re up against more volatility than salaried workers, and you don’t have an employer to absorb these costs on your behalf.
Even the most in-demand freelancer may be subject to the ebb and flow of contracts as you work through peak and off seasons — not to mention dealing with your clients! According to Bill.com, nearly half of all freelancers (45%) get paid late.
An emergency fund can help you stretch your cash until you get paid, and it gives you a way to cover sick days, repairs, and other unexpected expenses that crop up along the way. And although an online loan may help you handle unexpected expenses in an emergency, it’s better to use your cash than borrowing money you’ll have to pay back.
Now that you know how important these savings are, it’s time to build them into each invoice. Learn how to set appropriate rates that make you desirable to clients without sacrificing your financial or emotional well-being.
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