Whether you’re just starting out in freelance writing or you’ve been doing it for years, establishing good money habits is key to staying successful. Keeping your bills and expenses under control, building an emergency fund, paying off debt, saving for retirement, and investing are all important to reaching your financial goals. People who budget well know to ask questions like, “Are home warranties worth it?” because spending money has to make sense and being financially sound is great for someone who does not have a steady income.
1. Pay Your Bills on Time
Aside from being a legal requirement, paying your bills on time is essential to maintaining financial stability. This is because late payments often result in additional charges and fees, which can add up over time and strain your budget.
You can avoid this problem by using budgeting tools to help you stay on top of your payments and expenses, or by creating a system for reminding yourself about due dates. Additionally, by communicating with your creditors, you can sometimes work out payment plans to avoid late fees and maintain a positive relationship with them.
Remember to pay your bills as soon as you receive them, and consider setting up automatic payments to make this easier. This will allow you to keep your credit score in good standing, which will make it much easier for you to secure future loans or credit cards with favorable terms and rates.
2. Build Up Your Emergency Fund
It’s important to build up your emergency savings so that you can cover expenses in the event of an unexpected financial shock. A full emergency fund may include enough money to cover basic living costs, such as rent or mortgage payments and utilities, food, clothing and transportation.
Saving a specific amount each month can help you reach this goal, especially if you automate your savings by transferring a fixed amount of your paycheck to a dedicated emergency fund account each payday. This will make it difficult to accidentally spend the money.
Other ways to save for an emergency fund may include purchasing generic brands or reducing your streaming subscriptions, skipping lunch outings and dinners with friends and taking shorter showers to save on your water bill, working overtime or grabbing a side hustle, like delivering food or tutoring online.
3. Track Your Spending
Even though a freelance writer makes their own schedule, they have to make payments and meet financial obligations just like any other person. Keeping track of your expenses and cash flow is important to maintaining good financial habits and avoiding debt.
Using an app to track your spending can make it easier to keep up with your budget
goals. The simplest way to do this is by linking all your accounts and expenses, so you can see it all at a glance.
There are many apps that help you do this, but if you don’t want to use an app, you can write down everything you spend in a notebook or on your smartphone. Using this system, you can subtract each expense from your income to find out where you can save money or cut back on unnecessary spending.
4. Pay Off Debt
Whether it’s debt from an emergency expense or an unsustainable lifestyle, getting out of debt is one of the most important money habits freelance writers can adopt. It’s essential to be aware of your spending and savings, practice zero budgeting (where you spend only what you make), and have a strategy for paying off debt.
If you’re in debt, start by focusing on making the minimum payments and then using any windfalls, like tax refunds or work bonuses, to make a dent in your debt balance. Ideally, you should separate personal and business expenses and use the 50/30/20 budget formula to keep essentials, like housing, at 50% of your income.
For extra cash, consider opening a side business or monetizing your passions. A pet owner could offer mobile grooming services, for example, while a writer might turn their book into a course.
A freelance writer’s financial success often depends on sound habits and discipline. By taking the time to set savings and investing goals, freelance writers can build the security they need for a healthy and long career in freelancing.
By setting aside money for taxes, health insurance and a cash cushion, freelancers can feel more confident when the lean times hit. This will give them peace of mind to keep working on what they love and avoid burnout.
Another great tip for freelance writers is to get a business credit card. This will make record keeping much simpler, plus it can often help them earn rewards for every transaction. This can save them more in the long run. Learn more about this here.