One of the perks of being a freelancer is getting to set my own hours and uphold a schedule that works for me. Sometimes, that means working upward of 40 hours a week when things are busy. Other times, it means working 15 hours a week when I have sick children at home or school breaks that leave me without child care. Thus, my income can vary tremendously from week to week and month to month, making it harder to save money.
Thankfully, I still manage to sock away a decent chunk of my earnings, even with large fluctuations in income. Here’s how I do it.
1. I follow a budget
Back in the day, when I got a regular, steady paycheck, I’d pay my bills, buy myself treats like dinners out or concert tickets, and not really think much of it. Then I realized something: Not only was I not saving money month to month, but I had no idea where my entire paycheck was going. That’s when I started using a budget, and I haven’t strayed since.
My budget maps out my monthly expenses in order of priority, so that I start with my essentials, like housing and transportation, and then work my way down to wants like cable TV, entertainment, and restaurant meals. That way, I can see where I’m spending money and where there’s room to cut back if I grow unhappy with the amount I’m socking away.
2. I keep my major expenses low
Housing is the typical American’s single greatest monthly expense, but when I bought my house, I made a concerted effort to keep my costs on the low side. Or, to put it another way, I could’ve easily qualified for almost double the mortgage I wound up taking out, but I intentionally kept that expense low to ensure that I’d have money left over for savings. The same holds true for transportation — though my family owns two vehicles, one of them is a 12-year-old compact car and the other is a standard minivan. Nothing fancy. Keeping my big expenses low helps keep my overall spending down, thereby freeing up cash for savings.
3. I pay myself first
Because I stick to a budget and keep my large expenses fairly low relative to my income, I feel confident sticking a certain amount of money into savings each month off the bat, even if my earnings come in on the low end. And to ensure that I don’t stray, I automate my savings so that I’m paying myself first every month.
This is perhaps the most important thing that helps me stick to my savings goals. My income can vary widely so that I might earn a few thousand dollars less in a given month than I did the month before. And during those months, it’s tempting to let my savings fall by the wayside, since I want my income for other purposes. But that option isn’t on the table, because the money that would otherwise go to “wants” gets transferred to savings before I can touch it. Therefore, my only choice during those lower-earning months is to cut back on nonessentials, whether it’s eating out less or entertaining my family more at home instead of spending money on leisure.
During the months when my income is higher, I let myself relax a bit more. We’ll go out to a nicer restaurant, or do a small home project that makes our living space more comfortable or aesthetically pleasing. But I don’t spend all of my extra money, either. In addition to the money that gets sent to savings off the bat, I’ll also push myself to bank some of the excess so that I’m padding my cash reserves. Granted, I don’t always do that, because life’s temptations often get in the way, but even without that extra savings, I know I’m putting away 20% of my income month after month, and sometimes more.
It’s not always easy managing your money when your income isn’t steady. But I’ve learned to work around it and stick to a plan, and it’s helped me get into a pretty decent groove savings-wise.