Wednesday, January 2, 2019

3 Essential Personal Saving And Investing Tips For Freelancers

https://i.imgur.com/ZUhCmWk.png
Employees have great options for savings plans. There are often company retirement plans, 401(k) programs, and other choices – all of these can be made “easy” through payroll deductions.  The employee never “sees” that money, and the savings occur on auto-pilot.

If you’re a freelancer, your financial matters are more complicated. All of your income comes directly to you and is yours to dispose of as you please. If a part of that “disposal” does not include savings and investment, especially for retirement, then the prospects for your future are rather murky.

Adding to the challenges of savings is the fact that a freelancer’s income can vary so much from month to month and even year to year. And so, a plan for regular savings is tough to put in place. To accumulate wealth, freelancers need more self-discipline and careful planning than regular employees.

Where to begin with your personal finances

Begin with a budget. You have to have a clear picture of what your monthly expenses are before you can even begin to plan for the future. You have to set a goal of bringing in at least enough to meet those monthly expenses.

Once you know exactly how much you spend, you have to muster up the self-discipline to take any excess you have and put it into some form of savings and investments.

The other start point is to set a realistic retirement age goal. This will give you a time frame and a method of planning, once you know the target number of years you have to amass your retirement income.

For anyone who is looking toward long or short-term investing, there are options that come with greater return potential and greater risk and those that come with less risk but lower returns. As a freelancer who is looking for investment opportunities, you have these same choices. And you must be careful to find the balance between the two.

Here are some important tips to ensure that you are saving and investing wisely and will have enough once you reach the self-determined retirement age.

1. Emergency fund comes first

Because of unpredictable income, a freelancer must always first plan for those lean times when monthly income does not meet expenses. If you can put away an emergency fund of up to six months of income, this means that your savings and investment goals don’t have to be put on hold when income is low.

And here’s where the self-discipline comes in. When the great months happen, be sure to replace what you’ve used from the emergency fund.

Read More: 3 Essential Personal Saving And Investing Tips For Freelancers