Things new freelancers should know, learn to save

[florydev]

I started this discussion over in the Freelancer forum but I wanted to call attention to it here:

https://community.upwork.com/t5/Freelancers/How-important-is-savings-to-a-freelancer/td-p/653144/pag...

There are some very experienced freelancers, all of whom point out that saving is especially important for freelancing and almost everyone cites the same reason: Work is not consistent and you need, as Tiffany points out, operating reserves.

As you build your business you want to do your best to build a buffer of savings to smooth out those periods when work is not coming in.  Here is my last year sales by month:

March through July was grim, and if I had not had savings I would not have made it through until better times in Q4.  But another advantage in having a cushion is it also helps keep you from taking a job you shouldn't because you are desperate.  I believe that less than scrupilous people out there can smell the desperation on you.

People ask about two things a lot when starting freelancing, how to figure out your rate and how to build a consistent income.  In my opinion, these two things and savings are very connected.  If you are not making enough on the work you are doing to build up savings then you are not charging enough.  I think a very loose but useful calculation is to consider yourself only working half time so your bill rate should be at least double what you need to earn to survive.  Then if you take another step back from that and realize that means you will be either working all the time or scrambling for work (what you do with that other half of your time) you might want to adjust it up even more.

When you are working you need to earn enough to protect you for those times that you are not.  Your only other option than raising your rates to make that happen is working a LOT.  Take your pick.

And the only way I know to build consistent income from inconsistent work is to build up a reserve and pay yourself a consistent, lower, amount from that reserve.  The way I do this is that I pay into a seperate company bank account and then pay myself a set salary every two weeks.  I don't spend anything from my company account unless it is a company expense.  That way when times are good, like last October-December were for me the money builds up and I have that reserve automatically...and also money set aside to pay my taxes.

This is unpaid, unsolicited, and perhaps, unnecessary advice, so take it for what it's worth.

[dgimness]

Great advice Mark!

[your_sos]

This is really interesting, I feel like these beliefs are innate there, aware of them, but I have never put them into effect. It's true savings save ourselves in harsh times, but to keep myself in the save side I naver achieve. There are always certain things that rise and ruin every plan I had set before. 

But your insights are great Mr. 
Chapeau

[asadiqbal14]

This advice is very Important to me. I like this

[8b743fe5]

Starting as a new freelancer can be both exciting and challenging. Here are some essential tips to help you succeed and save money as a freelancer:

1. Understand Your Niche:

• Identify your skills and target a specific niche. Knowing your niche well will help you stand out and attract clients more easily.

2. Create a Strong Portfolio:

• Develop a portfolio showcasing your best work. This is crucial for clients to assess your skills and decide if you're the right fit for their needs.

3. Set Clear Goals:

• Establish both short-term and long-term goals. This will guide your efforts and help you measure your success.

4. Effective Time Management:

• Develop a schedule that works for you. Efficient time management is key to balancing work and personal life.

5. Build a Professional Online Presence:

• Create a professional website and optimize your LinkedIn profile. Clients often look for freelancers online, so make a strong first impression.

6. Networking:

• Attend industry events, join online forums, and connect with other freelancers. Networking can open up opportunities and provide valuable advice.

7. Research Market Rates:

• Understand the standard rates for your services in the market. This ensures you don't undercharge and helps you negotiate fair compensation.

8. Create Contracts:

• Always use contracts for your projects. This protects both you and your clients by outlining expectations, timelines, and payment terms.

9. Save for Taxes:

• Set aside a portion of your income for taxes. Freelancers are responsible for their own taxes, so plan accordingly to avoid financial stress at tax time.