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Three Freelancing Money Tips
These are basic tips I have followed for the past two years. I cannot say that these tips would assure you of a regular 6-digit income in the future, I am still figuring that out for myself. But I know that by following these tips, we are able to live comfortably (this is relative) without going in debt and we are on track to save around 30% of our household income for this year.
1. Start with a huge buffer fund
I was only confident to go to freelance when I knew that we had money in case I did not get paid for three months. If that buffer fund runs out, I am looking for work again. So my goal since going freelance has been to continue adding to that buffer fund so that I will not have to go back to regular work again.
When my laptop gave out earlier this year, I used that fund to buy myself a new one. I am a researcher and it is absolutely critical to my work. I am still waiting for a check that was supposed to come 15 days ago. I am again using that buffer fund for my expenses.
A friend who went freelance told me that she used to stay up at night wondering where she will pay her rent after her current project. That is a nagging source of stress and it puts you in a bad position when negotiating. These sneaky clients can smell desperation and the only way to stand firm in what you feel is your worth is to have the ability to walk away from a project that is not worth your time.
2. Peg your lifestyle to the minimum amount you can earn on a regular basis
There were months I took home 15,000 pesos. There were months I took home more than 100,000 pesos. Instead of living a lifestyle that costs around 50,000 pesos, I set our budget assuming that I can only contribute 20,000 a month.
This means that we continue renting and commuting. Our only ‘splurge’ in our fixed expenses is we live in a business district and the awful rental rates that come with it. But we walk to do our groceries, the hospital is near in cases of pedia visits or sickness, and there are a lot of small establishments in the area to hang out in. I usually spend nights with my partner walking or jogging around.
We can afford a couple of vacations. Either by waiting it out in group deal sites or joining the other when we have a field assignment (nature of our industry include a lot of travel). We can buy little stuff that makes us happy. Then we plan for the big purchases.
Aside from that, we just live a simple life. Until now, it has been easy to find amusement or joy in the little things.
3. Use scenario planning
Our regular budget relies on the minimum amount I can confidently promise to deliver. Then I start drafting several scenarios depending on how much more I earn on top of the minimum amount.
In order to do this, list down the categories of items you spend on or want to spend on (aside from fixed or regular expenses). Some of the categories I can think of that belong here would be travel, health/ sports, shopping, and technology gadgets.
I usually plan for three scenarios. For example:
- Scenario 1: What do I spend on if I earn an extra 100,000?
- Scenario 2: What do I spend on if I earn an extra 200,000?
- Scenario 3: What do I spend on if I earn an extra 300,000?
That is one good thing with freelancing. A good month or two could bring in more money than you have earned the past 6 months. Scenario planning is helpful in order to avoid unconscious buying. I am not against splurging (I plan to buy Louboutins again if I meet Scenario 2). I just think stuff we buy would be better if these are things we actually planned for.
Conclusion
I plunged to freelancing with big hopes of gaining freedom and control over my life. While I enumerated the realities and difficulties of this track, I can say that it has lived up to its promise so far.
I have walked away from shitty clients and said no to projects I felt would eat up so much of my time. Yes, it is hard to measure progress. But I learned to define success indicators on my own terms.
Whereas my turnaround time before could take weeks because of two to three layers of review process, I could produce outputs in days. I could try out some methodologies that would be too risky to try in a regular organization. I am able to pay attention to my postgraduate studies because of the time I have. I can write about the topics I used to care about but I did not have the time to do.
I share this post because I think freelancing is a viable track. I write this post for other females, especially mothers, who keep on trying to balance work with caring for their family. No, this life is not easy. But with proper planning and preparation, it can be done.
About me: I am a friend of Investor Juan and one of the early readers of his blog. I have contributed here previously. I finally started my own blog, but it is not about personal finance. I write about the topics involving my work namely, government, technology, and society. I think IJ can do a better job than I do in discussing finance, so the best I could do is to contribute here when I am writing something about money. I hope you found this useful.