Freelance Finance

Saving money as a freelancer, independent contractor or whatever you choose to call yourself if you don’t happen to have a full-time job with bennies, is tricky. We’ve discussed this before: Saving regularly is more challenging when your income is constantly changing. This is why Muck and I stick with percentages, which has worked like a charm for us for several years now. Is it still challenging? Yes. Do we still occasionally fantasize about a regular paycheck coming in the door every two weeks? OK, yeah. Do we want to go back to the cubicle life? No, no—a resounding NO.

So putting the details aside, what about the psychological challenges of saving? How do you stick with it? It doesn’t matter whether you’re flush with cash or struggling to get on your feet as a new freelancer: The difficulties of committing to and staying with a new habit cross all economic boundaries. So here are some quick tips for sticking with savings…

1. Have a Goal
You can’t get where you want to go if you don’t know where you’re going. How much do you want to save? What are you saving for? Deciding how much you want to set aside and what it will be designated for before you start will give you encouragement along the way. You will be able to see that you are zeroing in on your goal.

2. Set a Time Frame
Open-ended goals are harder to stick to, so give yourself a deadline. “I want to have $5,000 in my Emergency Account by Dec. 31…I want to set aside enough money for my health insurance deductible by January…” There’s nothing like a ticking clock to light a fire under your…well, you know.

3. Make a Plan
Now that you know how much you want to save, what you’re saving for and by what date you want to have the money in your grubby little mitts, you have to create a plan to get there. Remember that percentages work for any kind of savings, not just your established accounts (taxes, retirement, emergencies). You could decide to save an additional 3% of your income to put toward a vacation that you want to take in September. If you don’t want to use percentages, choose another approach—but be sure to choose one. You can deduct a set amount each week. Or, you can start skipping your lunches out and then, at the end of the week, apply the amount of money you saved to your goal.

4. Be Accountable
I’m all for self-discipline, but there’s more than enough research suggesting that people stick with their goals infinitely better if they have made themselves accountable to someone. This is the basis of operations for everything from weight-loss groups to recovery meetings. So tell someone you trust about your goal, and invite them to supportively—but sternly—stay on your case.

5. Reward Yourself
Once you’ve acheived your goal, give yourself some well-earned credit and a pre-determined treat. (Blowing all the money you’ve just saved on an impulse buy is obviously not advised.) In some cases—a nice vacation, for example—the treat IS the goal. If that’s not the case, be sure to do something special for yourself. Not only have you earned it, but it will give you the encouragement to save again…and again and again and again.

Later this week, we’ll be sharing our thoughts on the online commitment contract site, Stickk.com.