2020 was a hard year for the self-employed, and I for one certainly needed to tighten my belt. With the COVID-19 pandemic continuing to wreak havoc on the job market and employment prospects uncertain, it is more important than ever to squirrel away some extra pennies for the rainy days to come. Here are a few money-saving tips that have helped me to create an emergency buffer.
Knuckle Down On Your Expenses
As the 31st of January fast approaches, it’s time for the self-employed to sort out their expenses ready for self-assessment. Although there will always be people who try to claim too much through expenses, there are also plenty of us who fail to claim enough, either through laziness or lack of knowledge about what does and doesn’t qualify.
If like me, you tend to lose track of receipts and overlook smaller expenses then it’s time to knuckle down and make every penny count. Whether you’re using a proportion of your home as a home office, have recently changed fuel supplier, or needed to purchase new equipment to see you through lockdown, you can claim for it on your expenses and you should.
Cull Your Subscriptions And Memberships
When I first started out as a freelance writer, I was made to feel as though I needed to be subscribed to a number of industry magazines, task management software and subscription services in order to do my job; when the truth is, I didn’t. Slowly but surely I started to uncover what was useful and what wasn’t and, as it turns out, most were the latter. Although at first glance most subscriptions look relatively inexpensive, they soon add up and you can free up a lot of monthly cash flow by reducing the number you are enslaved to.
Review Your Worth
One of the biggest mistakes made by new freelancers is to undervalue their worth. When I first began accepting writing commissions I severely underestimated how long each task would take me, resulting in an abysmal hourly rate and unnecessary stress. Over time, I started to get better at estimating the time I needed for each job, which meant I could charge a rate that better reflected the time and effort I would be putting into the project. Even without years of experience under your belt, if you provide a quality service to someone then you deserve to be paid well for your time and energy. In some cases, this means reviewing your pricing and increasing your fees, but in others, it could mean working smarter not harder.
Budget For Things
When I worked a full-time job I had my salary paid into my main bank account and it sat there, slowly being chipped away at as bills, rent, and shopping expenses left my account. More often than not, I’d check in at the middle of the month to see how much money I had left, only to be shocked at how low my balance had gotten – where was my money going? As a freelancer, I no longer get a fat lump sum at the end of the month, my invoices come in somewhat randomly which means I need to be better with my money. To help me keep track of what’s coming in and what’s going out I started making full use of my Monzo bank account by creating pots. Rather than having my money all in one place, I split it to ensure I have enough to cover all of my expenses, and then split the remaining balance to ensure that I put some into my various savings accounts. There are now dozens of smart challenger banks like Monzo including Starling, Revolut and Yolt, which make it easier to stay on top of your money which is a god-send when expenses seem to be ever-so regular and invoices
Start A No Spend Challenge
At the end of the day, the only way to save money is to live below your means and that involves spending less than you earn. I’ll be the first person to hold my hand up and say that I like to spend money. Pre-COVID this was on cafe coffees and brunch, but through 2020 it turned into more of an online addiction. ASOS became my new high street and Amazon could deliver new kitchen gadgets in less than 24hrs – I definitely needed that dachshund cookie cutter. To make myself feel good while the world locked down I spent money. It wasn’t long before I realised that I needed to reign in my spending and the easiest way to do this was to enrol in a No Spend Challenge. Put simply, a No Spend Challenge involves only spending money on true necessities, such as food, utilities, and housing costs. I chose to start easy and set a 7 day No Spend Challenge, which seemed to fly by without a hitch, but it can just as easily be 14 days, 30 days, 90 days or longer. Throughout my No Spend Challenge, I kept a record of all the items I wanted to buy, and when the challenge was up, I revisited them to see if I still wanted or needed them – as it turns out, about 80% of them didn’t make the cut the second time around.