From your seat at your desk, chained to your cubicle, the gig way of life looks like a refreshing alternative to your fluorescent 9–5 reality. Freelance workers get to choose when they want to work, where they want to work, and for whom they want to work. Being your own boss offers you newfound freedom and flexibility, but it’s not all sunshine and roses. It’s not always easy to leave behind what you know for something entirely different.
Change to your routine won’t be the only difficulty you face. Going it alone as a freelancer can also be financially challenging, as you won’t have many of the same support systems to help you prepare for emergencies, disability, or medical issues.
You can still survive these crises, but it will take careful planning before you can cut your shackles. The following tips will help create a financial cushion for your new life as a freelancer.
Figure out what you need
Some financial experts suggest you squirrel away as much as one year of wages to cover unexpected issues that limit your ability to earn a living. Others suggest saving 20 percent of your income to cover smaller emergencies like surprise household or auto repairs. If you aren’t sure which is more appropriate or realistic for your circumstances, you may want to speak with a financial advisor about your options. They can help you create a plan that gets you where you need to be.
Saving doesn’t come naturally to everyone. For some, it’s a lot easier to let go of their hard-earned dollars than it is to keep them. If that’s the case for you, you may have better luck with tricking yourself into saving.
One old-fashioned method of trickery is putting your extra change in a piggy bank — though this only works if you rely primarily on cash to make your purchases. In an increasingly digital world, where you can use your phone to buy office supplies or your morning cup of joe, you won’t always have physical change to save.
Automating your savings is an easy workaround that lets you save without really thinking about it. You can pre-authorize automatic withdrawals from your account and put them into savings at the start of every month.
Skimming off the top of every month has a trickle-down effect. You’ll have less money left over to cover the necessities once you’ve contributed to savings, so you’ll have to be careful with how you spend it. By working with a smaller monthly budget, you’re less likely to spend your money on unnecessary things.
Search out fintech alternatives
Life is full of surprises, and many of them aren’t the happy kind. Sometimes, they arrive in the form of an unexpected bill or traffic accident that tests your finances. If this happens before you’ve built up a considerable emergency fund, you may not know how to cover a fender bender paid outside of insurance. While traditional advance loans can help cover some financial issues, they aren’t always the right solution thanks to your career choice. They can be difficult to secure, or they may take too long to arrive in your bank account.
When you’re missing critical funds during an emergency, a company like MoneyKey can help. They’re part of a bustling fintech industry that provides alternatives to the traditional borrowing experience. While many retail banks follow outdated methods to review and approve cash loans, these fintech lenders have a fresher take on lending. Unlike conventional banks, online lenders like MoneyKey remove some of the complexities that act as barriers to getting the help you need.
They do it all online, so they can help you faster with online payday loans that you can receive in as little as one business day. Online lenders even have apps, so you can solve your cash flow problems faster and easier than ever before.
Know your online resources
As an office grunt, you have access to an HR department that can answer questions about benefits, insurance, and other money-related concerns. You won’t be able to rely on these professionals once you quit your job and start freelancing.
You need to be proactive if you expect to find the answers to your burning questions about the gig life. Luckily, in the age of information, you can find every answer to your questions online — and then some.
When you want basic information about how to budget or save wisely as a freelancer, personal finance websites like CNBC, Nerd Wallet, and Wise Bread offer simple tips to balance your books. Freelancers themselves often write these guides, making them reliable sources for advice on how to build a retirement fund, contribute to benefits, and make an emergency fund.
Freelancing takes work, but it’s worth it
Freelance work can seem like an amazing opportunity when you feel like you’re stuck in the office. Before you take a flying leap into freelance-hood, you need to face the financial realities of this career choice. While it offers your more freedom, it may be more difficult to recover from emergencies. Prevent this from happening by developing a robust emergency fund before you quit your day job. You’ll be better prepared to appreciate your new line of work.