If you’re always wondering how to save more on monthly expenses as a freelancer, you came to the right place. In this article, you’ll find a few tips to help you manage your money in a better way and to make sure your freelancing business won’t burn you out, giving you the financial stability a full-time job would provide to you.
We’ve already discussed how to manage money as freelancers but it’s now time to give you the tools you may need to save in the long run.
In this guide, I want to go more in deep and give you a little advice on how to save on expenses every month properly. We all know how hard it can be to be diligent and organized, but when it comes to money, freelancers and the self-employed need to pay extra attention.
The goal is not to arrive at the end of the month struggling or not saving enough if bad times come.
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Review your monthly expenditures
You may have been caught up in a loop where you pay a certain amount of money every month, but you don’t know where your money goes. You only know that at the end of the month, your earnings are almost all gone, or are sensibly reduced. The first thing to do is to analyze your monthly expenditures. This review will give you an idea of what’s necessary and where you can cut costs. Here the most critical areas to investigate to have a better understanding of your financial situation.
1. At home food
Being freelancers means that we can easily organize our meals and automatically save money. But it also means that sometimes (if not often) we become bored and we seek for different types of food, or we’re buried with work, and we don’t have time to cook. Food for freelancers can represent a significant expense, whether it is because food is expensive or we often opt for taking away or delivery. Make sure to outline what’s your current expenditure on food by breaking it down to get real value out of it.
You may discover that ordering cookies from your close bakery take a big chunk of money from your monthly budget, and you may save by making the cookies yourself.
2. Dining out
Dining out is very well needed for freelancers: we spend days alone, we mostly work at home, we eat at home. But we need to eat out the more we can, in order not to feel burned by the stress of being alone and also to get out of the house. Dining out can be extremely expensive, and if it’s a necessity, it is also something that has to be adequately managed to avoid spending too much money. Take a copy of the receipts and evaluate how much do you spend on eating out every week.
Then consider if you want to cut on this expense or if you want to cut on something else and use the money for going out: remember that certain things are necessary to avoid burnout, and if dining out is your thing, do not put limits to yourself and instead cut on something less important for you, and your well-being.
Read Also: 400+ Motivational Quotes for Freelancers
3. Cellphone and Internet Service
It’s easy to spend too much money on cellphone and Internet service, but do we need it? Sometimes, an offer that looked unmissable is just not relevant to us, but we’re stuck with it. Other times, we don’t even know how much we’re spending, just because we have a direct debit, and we don’t have to pay anything. In both cases, it’s good to review our expenditures for these services and evaluate that what we are spending is needed.
Examine your bill to see whether there are any features you can drop and evaluate other providers to see if you can find one that delivers similar quality and characteristics for less money.
Clothing costs can be too high, significantly, if we don’t limit ourselves. For people working from home, buying clothes is one of the strangest things ever: you may not need as many, but you may still buy them.
To reduce your monthly expenses, start cutting down on clothing costs. It doesn’t mean you have to go shopping in thrift stores, simply that you evaluate your real needs and buy accordingly.
Just remember that you’re not going to an office every day, and you don’t need different clothes every day, so buy smart: less but of better quality, something that lasts for a long time and that suits your lifestyle. You may end up not only saving, but also decluttering in an unexpected yet rewarding way.
5. Monthly Memberships and Subscriptions
How many times have you completely forgot your monthly memberships and subscriptions? It happens all the time; they’re paid automatically through your bank or credit card accounts. But if you investigate, you may understand what of these services you could ditch, since you’re not using it.
Are you a proud Netflix and Amazon Prime subscriber? Which one do you use the most?
It is so easy to buy stuff these days! Even when we don’t need anything, just by looking at that specific “anything” may become the reason why we want to buy it. With Amazon and a lot of other websites available 24/24 7/7, it’s hard to resist. You know what?
Look around, and you’ll notice how many things you have and that you don’t need.
Start reshaping the way you buy habits: always ask yourself if you need the item you want to buy, and if you decide to buy it, make sure you check prices in different places. Just saving a small amount on every purchase may translate into saving a lot of money in the long run. And if you can also become more minimalist in choosing what to buy, your wallet will be happier.
7. Credit Card
If buying is easy, it’s even easier to buy with a credit card. Whether it’s used online or in traditional shops, a credit card can be a savior or a disaster. To avoid paying too much every month, make sure you use responsibly.
First of all, do not allow your favorite online shops to charge without you entering the credit card details, just to put an extra layer of protection between you and your shopping habits.
Then, use cash when you can or, if you prefer to use the card, take note of every purchase and act accordingly in regards to cutting down on things. Last but not least, do not use your credit card as a financing tool to buy stuff: use it instead of money, but not as a way to dilute your payments because you may end up with a lot of money to pay every month, and this will have an impact on your score and your savings.
How to to save more money as a freelancer
Once you’ve analyzed your expenses, it’s time to put a stop to non-sense spending. These are some of the things you can do to save money monthly.
1. Cut or review the expenses above
Make sure you thoroughly review the expenditures in-depth and make the necessary adjustments to your routine.
Every month give yourself a target and do not go overboard. You should be able, unless a specific situation arises, to save 10-15% of your income monthly.
3. Decide on your priorities
If you want to spend less money, you need to prioritize the things you want to pay for and the things you want to budget for. You may feel that eating out often is a priority for you, but having high-speed Internet is not. Or that you want to buy new clothes every month, but you don’t want to spend on a streaming service. Priorities are personal, and it’s up to you to allocate resources to make sure your goals are fulfilled.
4. Know what expenses are tax-deductible
Knowing what expenses are tax-deductible is crucial for every freelancer. If you know what purchases or payments can be treated as tax-deductible, there’s more than a chance that you can plan better and safer. Bear in mind that this doesn’t mean you start buying putting everything under “business expenses,” just that some of your expenses can be offset against tax, allowing you to save on a monthly and also yearly.
Here’s a list of the most common business expenses that are tax-deductible (please check the specific local rules):
- Internet/broadband costs
- Mobile phone plan
- House rent if it’s used as your office
- Tech equipment, when related to your business
- Travel expenses, when related to business trips
- Professional training or online courses related to your business
- Business books related to your business
- Professional subscriptions
- Advertising costs related to your business
- Website hosting related to your business
- Industry-specific equipment
The 30 Day Savings Rule
If you are into savings and spending less, you should try to apply the 30 Days Saving Rules to your spending habits.
The rule is as easy as it sounds: you need to pause your instinct to buy something for 30 days, to understand if you need this item or service in your life. If, after 30 days, you still want that item, then you can purchase it; if you have completely forgotten about this item or you’ve realized that you don’t need it, you have saved money.
This method works even better if you put aside some money to spend on things; if you have to take money out of your savings account, you’ll think about it at least twice. In 30 days, you may end up saving way more than what you thought, and without even suffering from not buying things.
The importance of a spending plan
If you’ve nailed down your expenses, decided to cut on something, perhaps also ready to start using the 30 Day Savings Rule, you are now ready to create a monthly spending plan that will help you get organized and taking rack of your money.
You can use two different approaches in this matter: bottom-up and top-down. These two approaches are usually adopted by businesses, and since you’re a freelancer you can consider yourself a business as well, and choose one of the two.
1. Bottom-up spending plan
You need to assign a budget to every single item in a given category. The total for that category will be totaled up to define your overall budget. Totaling up the expenditure on every category will give you the precise budget to spend each month.
2. Top-down spending plan
This approach allows you to allocate the budget without thinking too much about it. You know you have a certain amount of money to spend each month, and you will distribute it on a daily basis according to the activities you have decided to pursue.
3. What’s the best approach when creating a spending plan?
It depends on your needs and also how in deep you want to go. The bottom-up plan is extremely detailed and it can result in a stressful system if you give yourself rules that are too strict. On the opposite side, the top-down approach can give you very few constraints and this can result in a badly managed budget. The best approach is the one that you feel yours, and that can help you shape your budgeting needs at their best.
The Best Personal Budgeting Courses Online
Based on all of the above, it is a good idea to start looking at your and your finances as a proper business and, with this mindset, define all the steps you need to save more money monthly and regularly without compromising too much on the things you like or need.
If you’re into budgeting and planning everything, these are a few online courses I recommend to help you stay on track and able to plan your monthly expenditure and savings in the best way. Even if these courses are meant for businesses, they’re perfect for freelancers as well because they not only will give you the knowledge you need to plan smartly but will also put you in the position of considering yourself as an entrepreneur and, with that being said, a business.
1. Financial Planning & Analysis: Building a Company’s Budget
Learn the fundamental mechanics of financial planning, perform top-down and bottom-up forecasting, and learn how to budget.
2. Learn How To Budget – Personal budgeting made easy
Everything you need to know and everything you need to do to set and stick to a monthly budget.
3. Budgeting Success Techniques!
Learn to master your monthly budget and develop the best budgeting habits for your business and your personal finance.
4. Excel Basics: Learn While Creating a Personal Budget
Learn the basics of Excel while working on your personal budget project.
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