Learning to be a successful freelancer means mastering more than the skills and expertise you are selling. One of these success skills is learning to manage cash flow. Inevitably, you’ll have a client who pays later than when your bills are due.
Since you no longer rely on a regular paycheck, this can be a rude awakening for the newly self-employed. First, you must learn to build a savings buffer to weather the dry spells. Next, it is necessary to evaluate all of your monthly expenses and see what areas can be made less costly. Both of these strategies give you more control so you can work the other side of the coin: booking more work at higher fees.
But the fact remains that at the core a successful freelancer is a frugal freelancer.
“Frugality” means different things to different people. Some have a negative association with the word because it reminds them of jerks who don’t tip wait staff, or blockheads who demand special treatment or excessive discounts for the same money. Others have a negative association with the word “frugality” because they have a mental image of someone scraping by for survival — and no one wants to picture themselves darning socks and reusing tea bags in order to survive.
Both of these and other misconceptions about frugality can hurt a talented freelancer. That’s because truly living frugally is self-defined. Being frugal doesn’t mean someone else has to lose so you can win. Nor does it mean that you’ll always need to suffer to save a few nickels. In fact, it only makes sense to control your expenses.
So, how do you do it?
While the answer is completely unique to you and your situation, let’s look at three big areas of expense most of us share. Examine these for the biggest frugal “wins” first, and then decide if you want to double down with other cost-saving measures. After all, it matters more what you keep than what you earn!
Rent or Mortgage
We’re all emotionally — and fiscally — tied to where we live. If we are honest with ourselves, many of us choose to live where we do for the status it connotes. For many of us it is inconceivable to live anywhere but the absolute best apartment or house your money (and perhaps the bank’s money) can buy.
I know; I’ve played that game. I once lived on trendy street addresses in Los Angeles and New York City. Know what I have now? An unknown address in small-town America. Know what else I have? The ability to pick and choose projects, and money left over each month, too. In other words: more freedom. However, my frugal-living housing story isn’t even that dramatic.
Here’s a more radical example of frugal living for greater financial return. A friend I admire saved her money and bought a small piece of rural land in cash. Then, on weekends, over the next year, she built herself a tiny home made of almost entirely of recycled finds on Craiglist. She now has no rent payments, and no mortgage, either! She freelances only on projects that “mean something” to her and spends the rest of her time and money traveling the world with her boyfriend. Awesome, right?
You might not want to live in a self-sustaining cabin in the woods, but you can look carefully at your housing expenses. Which ones are necessary? Which ones are tied to your ego? Are you conforming to a script that doesn’t make you happy? Smaller spaces, for example, tend to cost less to maintain.
Examine where you live now and if, truly, you need to live there to do your work. Some professions do require you to live a certain place, but many more do not. In fact, it is easier today than ever before to make your money in one market but live somewhere less expensive. It takes determination and the ability to nurture your professional connections.
Members of Gen Y are already familiar with a freelancer’s reality of fluctuating job opportunities. Gen Y, and others, are buying fewer cars and choosing to live in more walkable and bikeable areas. On the surface, this is great because owning a car — even if you own it outright — can be expensive to insure and fuel. However, on the flip side, walkable and bikeable neighborhoods tend to command more expensive rent and higher mortgages.
So, you need to strike a balance between the cost of where you live and your transportation costs. One key thing to ask yourself is if you are paying for the exceptions.
For instance, let’s say you own your car outright but you have to pay for monthly parking. If you only use your car once a month to leave the city, maybe it is more cost-effective to use a car-sharing service like ZipCar for irregular trips. Similarly, it might be more cost-effective to have a membership to a bikeshare service like Capital Bikeshare in Washington, D.C., than it is to live closer to the nearest transit station.
Similarly, are you paying monthly car payments so you can drive a “safe car,” or are you chained to those payments because your ego won’t allow you to drive anything less than the kind of car you currently drive? If you’re driving a vehicle to impress others, is it really worth the hours you spend earning the money to drive it?
These are the difficult questions to ask, but considering them can yield tremendous savings. I spent years making car payments, but found that by moving to a walkable neighborhood and paying for a clunker in cash, I have all the transportation I need — with few of the ongoing expenses. Wish I had done this years ago!
General Consumption: Buy (Nearly Everything) Used
If you had to choose one thing to always buy new you’d probably choose underwear. At least, I would. But, no matter how far (or not) you want to stretch a dollar, consider that we live in a land of tremendous waste — and opportunity. It is possible to live comfortably by intentionally focusing on buying “pre-owned” items, from housewares to clothing. One caveat? Avoid older appliances because most will be more costly to operate compared to the more modern, energy-efficient versions.
Look for the greatest deals when you buy quality items that can be repaired, reupholstered, or otherwise renewed. Often, shopping second-hand can be a creative goldmine because you can take someone else’s stuff and really make it your own. You get the satisfaction of owning something more unique than the masses, and knowing that your efforts are very “green,” too.
Before you can object and say, “But I don’t want to buy out of date fashions!” consider your freelancing goals of freedom and flexibility. As is frequently said, “What you own owns you.” For inspiration, watch this TED talk, “Wear Nothing New,” about second-hand fashion by Jessi Arrington.
More importantly, being frugal can give you something priceless: more freedom. The decision to live frugally makes freelancing easier and more enjoyable because you’re no longer taking clients “because you need the money.” This gives you added power to be more selective about what clients and projects you accept.
Remember: How you live frugally is a reflection of your own values. Being frugal won’t automatically make you a cheapskate, and, more importantly, will go a long way to ensuring your success as a freelancer.
As you reduce your overhead in these three key areas, you’ll discover more freedom to choose the projects you want and reduce your overall stress so you can focus on booking more work at higher rates. Being frugal isn’t just a mindset but a necessity for successful freelancers seeking maximum effectiveness.
- License: Creative Commons image source
Katie McCaskey is a freelance journalist who writes for Vistaprint Deals, the official provider of Vistaprint.com coupon codes to help freelancers and small business owners save on custom marketing products. Katie also owns a small business in Staunton, Virginia, and has covered marketing techniques and social trends for over 10 years.