How To Save For Emergencies, Retirement, And More When You’re A Freelancer

It’s a New Year and with that comes new goals and resolutions for our freelance businesses. Among those goals for many is how to save for emergencies, retirement, and more when you’re a freelancer.

I’m not going to lie. Being a freelancer creates unique challenges when it comes to money management and saving for a rainy day or future goal can be one of them. However, there are many ways achieve your financial goals even when financial inflow is sporadic but, like many things in life, they require discipline and a clear picture of what you want to achieve.

Here is the three-step method that I’ve implemented and improved upon over the course of my almost two decades of freelancing.

One: Have A Clear Idea Of What You Are Trying To Achieve

Without a clear idea of what you want to achieve you likely will never get to where you want to go. As freelancers, more than nine-to-fivers, we need to visualize and plan more intensely.

Our income usually fluctuates more severely than most, with some months over-producing income and others barely providing enough to pay the monthly bills. Overcoming these obstacles requires a clear vision of where we are currently and where we want to go in the next month, 6 months, year, and beyond.

Exercise #1:

So, what do you want to achieve? Are you just looking to pay the bills? Do you want to build an emergency fund (which, by the way, is a MUST! Just do it!)? Are you looking to buy your own home in the future? Do you want to make sure your finances will support you in retirement? Are you looking to take a well-deserved European vacation?

All of those things and more are outstanding goals but if you don’t get real and calculate where you currently are and what you really need financially to achieve these things, you will likely be disappointed. Give yourself a gift and take advantage of the New Year’s excitement by figuring these things out now! Don’t wait another day. Start creating your future today.

The first thing you need to do is gather the materials needed for the exercise. Now, I tend to be quite traditional in that I like to physically write things in a notebook with my favorite pen. Then later, after I feel I’ve worked everything out on paper, I’ll head to my laptop and type everything up and create whatever is needed digitally (e.g. Word document, Excel spreadsheet, etc.) to make it easier for me to follow (but that’s step two).

However, do what works best for you. For some, like me, writing things physically with pen and paper drives the grooves deeper in our brains and makes implementing and achieving these things much easier and quicker. For others, typing everything directly into Word or Google Docs is the way they roll. You do you!

Once you’ve gathered everything, find a quiet place where you can think without being disturbed. Make sure that everyone around you knows you’re in an important meeting or working on a tight deadline and can’t be distracted. You need to treat this exercise just like you do any other part of your freelance business. It needs to take precedence over any household chores that might need to be done or anything else that can be easily put aside for a few hours.

Now sit down somewhere comfortable with a warm beverage of your choice and start brainstorming. Ask yourself some important questions and answer them honestly. Over or under stating where you are will only delay the achievement of your goals or celebrating the things you’ve already accomplished.

• Where are you financially RIGHT NOW?
  • Are you making enough to pay the bills?
    • If not, how much more do you need to make to not have to worry every month?
  • Are you saving any money?
    • Do you have an emergency savings account?
      • If not, why not?
      • If you do, how much do you have now and what is your target amount for this account?
  • Do you have a retirement account (Traditional IRA, Roth IRA, Investment account, pension plan, etc.)?
    • If not, what is your plan for retirement?
  • Do you have health insurance? Dental insurance? Vision insurance? Life insurance?
    • If not, why not?
    • What is your plan for insuring your health and wellness?
  • Are you constantly unprepared and struggling to pay the government at tax time?
• Where do you want to be financially?
  • What do you need to feel financially secure?
  • What are some of your future financial plans? How much money do you need to achieve these plans?
    • Do you want to buy a home?
    • Do you want to purchase a new car?
    • Are you dreaming of a vacation home on the beach?
    • Do you want to travel more?
    • Are you planning on having a child?
• What is stopping you from achieving these financial goals?
  • Do you need to make more money?
  • Do you need more clients or customers?
    • If you need more clients or customers, how many more do you need?
  • Do you need to handle your money more carefully and deliberately?
  • Are you not saving enough or at all?
  • Are you spending too much on insignificant things?
  • Are you just not paying attention to your finances at all?
  • Do you need to put aside more money to cover taxes at the end of the year?
• What are 1-3 actions you can take today, or in the next week, that will push you towards your financial goals?
  • Can you open a new savings account or two to start saving towards your goals?
  • Do you need to look into creating an IRA and/or investment account?
  • Can you contact some old clients or customers and sell them your product or services?
  • Can you start a list and implement it with ways to attract new clients or customers?
  • Is there an email you need to send to a key person that will help you with your goals?
  • What else can you do to mitigate and push through the things that have been stopping you from achieving your financial goals?

Once you’ve given yourself some undisturbed, quality time to answer these questions and more, it’s time to move to step two – creating a written plan.

Two: Create A Written Plan

Exercise #2:

Now that you know what you want to achieve and have listed some ways to achieve them, it’s time to put it in writing. This is where I usually shift from traditional to technology geek.

This is the point where you type your plans into a Word or Google Doc and it becomes real! So, that’s step one. Pull out your laptop, tablet, or smart phone and create a statement of what you’re going to accomplish and how you’re going to do it and BE AS SPECIFIC AS POSSIBLE. Leave nothing vague or to the imagination. Be very specific about the numbers you will accomplish and the dates when they will be achieved.

Create a step by step approach to achieving your goals including the dates you should achieve milestones like a quarter of the way there, half way there, three-quarters of the way there, and totally there! Also, plan what you’re going to do or treat yourself to once you achieve these milestone goals. Just don’t let them be so elaborate that it affects the achievement of the goal.

Once this step is done, make sure you add all the items with dates due into your calendar on your phone and computer. Make sure that you set reminders as well to keep you on track to accomplishing your goals.

I have a Excel Spreadsheet that calculates the exact amounts that I have to deposit into my Emergency, Investment, and other financial goals accounts every time I receive a payment for my services or products. The amounts are calculated according to a percentage that I’ve determined to be perfect for achieving my financial goals at this time. At the beginning of every year (or whenever my financial situation changes) I revisit that formula to decide if it needs to be adjusted a bit to fit my financial plan. (If any of you are interested in having me share this spreadsheet with you so you can adapt it to your needs, fill out the form below and I’ll send you a link to a copy you can use.)

This is also the time to set up any automated systems that will help you achieve your goals without having to think about it. For me, that means I have an automatic deposit into my emergency account every month with a set amount of money.

Three: Stay Disciplined And Pay Yourself First

The last step for how to save for emergencies, retirement, and more when you’re a freelancer is to stay disciplined and pay yourself first. There will be tight times where you’re wondering how to get all your bills paid and other times where the money is flowing in. Regardless of what phase your freelance business is currently in, it’s important to stay the course.

You need to treat your financial goals like you would treat paying your taxes. You have to pay your taxes and somehow you always manage to do that. Now treat yourself the same way.

Then decide in advance how much of each of your paychecks you’re going to dedicate to each of your financial goals. If you do not have an emergency account yet, I would advise you to give that top priority until you have a base amount in there. This will save you down the road when either your income is in a down cycle or you have an unexpected emergency expense. (NOTE: an unexpected emergency expense refers to only things like medical expenses or things like emergency repairs to your car or home. Emergency funds should never be touched for anything else. ONLY EMERGENCIES.)

Once you’ve built up an in your emergency account that you feel comfortable with then it’s time to start concentrating more on the other financial goals you have.

Lastly, keep your eyes on the goals. There will be times where it seems so hard but I promise you if you stick with your plan things will start to fall into place. You’ll start to see your greatest financial dreams being achieved and you’ll be so proud of yourself for taking charge and being strong. You’ve got this.

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To learn more about becoming a freelancer, check out our Getting Started articles here.

Also, check out these other articles for help handling your freelance finances:

3 Ways Excel Can Help You track Your Freelance Income And Expenses

3 Essential Tax Filing Tips For Freelancers

TAX TIME: What Is A Form 1099-NEC And Do I Need One?

How To Turn Your Blog Into A Paying Gig

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Veronica Buhl is a freelance social media manager and author, who has been a writer, editor, proofreader, summary writer, and transcriptionist for some of the top motivational and self-improvement speakers in the world. She has also helped numerous clients develop their websites, blogs, and social media presence in order to promote their businesses, non-profits, and projects. She is the author of the book, Making Your Business A Social Media Superstar, and is co-author of the book, The Massage Disadvantage. Her official website can be found at www.veronicabuhl.com