Intro:
One reason why freelancing gained steam in 2020 is that it’s possible to start with a zero budget. Individuals bring their industry experience to their new shops and use it as the starting point.
Once you gain clients, you will incur monthly charges. You’ll need to meet deadlines, provide high-quality work, and balance client needs too.
Therefore, scaling a freelance business eventually requires investment. You’ll need a fast-processing laptop and the latest smartphone. Then, software complements the technology.
Typical monthly expenses for freelancers include:
- Internet
- Telephone
- Software
- Office rental
Typical bills include:
- Marketing
- Accounting
- Legal
When it feels like your expenses have started growing too quickly, you have two choices – figure out where you can cut back or get creative in managing them.
Industry insiders estimate that freelancers incur operations costs that range from $585 to $785 monthly. They also estimate that the average freelancer earns $27,000 annually.
However, independent contractor income ranges from $16,000 to $75,000 annually too. On an hourly basis, freelancers can earn an average of $28.
Nonetheless, entrepreneurs know that they must manage their costs, even in good times.
Let’s look at seven clever ways to save on bills and monthly expenses as a freelancer.
1. Bundle
Saving money as a freelancer is not too different from saving money as a college student or mom. Instead of ordering services a la carte, bundle them.
Service providers will take a slight hit to their profit margin in return for higher volume.
A common bundle is internet, cable, and smartphone services.
In addition, become a couponer. There is no shame in saving a percentage or flat amount every month.
2. Use the Free Versions
The technology that makes remote working possible in 2022 got its start as several startups after the dot com bubble crash of the early 2000s. Therefore, these entrepreneurs know what it’s like to start from scratch.
Most entrepreneurs need at least one software platform to manage their business or complete their work.
Customer relationship management platforms are a great example. This software helps you manage your sales pipeline, billing, and marketing campaigns.
Several CRM providers offer a free trial. Then, they scale subscription fees according to the number of users. You can also find versions that stay free forever.
3. Purchase Insurance
The average small business pays between $300 to $600 monthly for insurance policies. To a freelancer who wants to save on bills and monthly expenses, this probably sounds like the opposite of saving.
Insurance is one of those expenses that doesn’t deliver an immediate payoff. Instead, insurance acts as a hedge against potential income losses in legal situations.
Freelancers can find themselves in court as a defendant. When this happens, even if you win, the legal expenses will hit your revenue. Take a look at the insurance policies that you need as an independent contractor. Then, start small and scale as your business grows.
To learn more about insurance for freelancers, complete some research. Gigly offers a guide on ghost insurance.
4. Barter
Everyone benefits from networking. Freelancers add a layer of benefits by bartering with each other. When you network, find natural business partnerships that boost income and help save on costs.
For example, web designers can barter with graphic designers and vice versa.
5. Avoid Debt
When you can’t pay for something with cash, give your potential purchase a second thought. If you want to save on costs, avoid debt. Unless you can pay off the charges monthly, you will incur interest rate charges.
Interest rate charges add up quickly and lead to the opposite of saving.
6. Work from Home
Working from home to save on expenses sounds obvious. An estimated 86% of freelancers do work from home instead of an office or coworking space.
Moreover, remember that you can deduct your home office expenses. Other common deductions for freelancers include:
- Internet and phone
- Training
- Vehicle
Your deductions lower your taxable income and lead to savings.
7. Start Small
One reason why small businesses and freelancers give up on their entrepreneurial dreams’ is costs. More specifically, they scale too fast and can’t keep up with the additional financial demands.
It’s OK to start small as a freelancer. When you scale, ensure that your finances can handle a sudden downturn in the economy or demand for a few months.
Conclusion
Managing expenses as a freelancer is easier if you employ an organization system. By keeping track of possible deductions, you lower your taxable income. When you network, search for opportunities where you can partner and barter to save more on costs.