Easy Ways to Build an Emergency Savings Fund as an Independent Contractor

Life as an independent contractor is often very unpredictable. Some days, you have an abundance of work and feel like there are not enough hours in the day to complete it all. Other times, though, work may dry up, and you may be wondering how you’re going to buy groceries next week. In the freelancing world, it’s always best to prepare for the worst that can happen, because nothing is a guarantee in life. The best way to stay ahead of the game is by building a savings account. 

Open A Bank Account 

A free checking account is the best way to go when it comes to tracking your money. Many places that offer checking accounts offer numerous options for savings accounts. When searching for an account, you want to make sure it’s free. Some will claim to be free, but only if you follow certain criteria, such as making a deposit a certain number of times per month, or something similar. The biggest way to start building the amount you have saved is to start tracking your earnings versus what you’re spending. A bank account is one of the best ways to budget out your money because it’s possible to go over your statements and cut out unnecessary spending. If you’re used to dealing with cash most of your life, switching to a bank account can make it easier to keep your money protected and to move money into savings whenever possible. You can open a Roth 401k or Roth ira account easily. 

Work From Home as Long as Possible 

Depending on what type of freelance work you do, you should try to cut the costs of your business down as much as you can. One way to do this is to keep working from home as long as possible to avoid having to pay the cost of renting an office. Telecommuting is a popular way to keep everything remote while having everything you need for your business right at your fingertips. Working remotely may not be an option for some businesses, but it’s an easy way to save money on business-related expenses. Even if you need to eventually hire workers to help you, you can do that remotely as well. 

Create a Budget

Creating and sticking to a budget as an independent contractor is not always easy because your earnings can often be quite unpredictable. In the freelancing world, there’s often no regular paycheck each week, and your earnings can be all over the place. The best way to start a budget is to write down all of your mandatory expenses. This is everything from your rent/mortgage, utility bills, groceries, etc. Then you’ll want to calculate your average monthly income, just a general idea would work. It’s also important to set aside money each paycheck for self-employment taxes. Once you have all of that calculated, you can determine what you have leftover for savings, and what you have leftover for anything else you may need. 

Get a Side Job 

If it’s possible, one way to increase your savings is to get a side job. Even if it’s a regular brick and mortar job that you work part-time, having that extra money can help you in times when you may earn less freelancing than you expected. If you’re not able to work outside of the home, you can try finding a side gig if time allows, just a way to allow you to make extra money here and there that you can stash away into savings. 

Regardless of what you do for a living, emergencies can happen, and you want to be prepared. Building your savings account is one way to protect yourself financially if something were to change in your life, affecting your income.