Freelancing is such an exciting way to pursue passion projects, gain career control, and turn your back on the traditional 9-5. But let’s be honest, if you use a tax return calculator, accountant or any other financial tool, it’s easy to see on paper that this kind of hustle can also come with a lot of income fluctuations, which can make long-term financial success difficult.
The good news is that with the right strategies, you can turn that side hustle into some serious savings! Let’s take a closer look:
The Rise Of The Side Hustler
According to Bankrate, nearly half of the American populace has a side hustle, and that number is likely to rise as opportunities to create extra revenue streams grow.
These opportunities don’t need to be short-lived in their benefits. With the right financial choices, you can make the most of those hard-won side hustle earnings to help you achieve a plethora of monetary goals that future-proof your finances for years to come.
Accepting the Uncertainty of Freelance Income
With freelancing comes unpredictable cash flow, and that is unlikely to ever change due to the very nature of the way the gig economy works. By accepting that as a fact, you can then work with the ebbs and flows of cash, turning your inconsistent income into lasting wealth.
Smart Strategies for Building Wealth As a Freelancer
Pay Yourself First
You landed a big project—awesome! You can go splash the cash, right? Sadly, no. The smart move is to set aside a percentage of every big financial payoff, putting it into a savings account and treating it with the same importance as you do bills and other expenses.
You’ll also need to set some aside to account for your taxes (ask your accountant or use a tax calculator to figure out the right amount). The happier news is that, once you’ve sorted these two things out, you most certainly use some of your side earnings to splurge on something fun.
Nurture An Emergency Fund
Around 60% of Americans don’t have enough money put aside to cover a big emergency expense. By building an emergency fund for yourself (enough to cover roughly 6 months of expenses), you set yourself up to sail through unexpected emergencies. You also set yourself up to easily handle the slow periods in freelancing that inevitably occur from time to time.
Be Flexible In How You Make Money
Never rely on just one client or type of work. The more you branch out into different revenue streams, the more diversified your income is—and the more financial security you will have.
Be Dedicated To Budgeting
Budgeting is always a good skill to have, especially when you are a freelancer. There are apps to help you do this, which are handy if you have long-term financial goals you want to reach by a certain time. A solid budget also means that you can have money consistently going into your emergency fund, your savings, your taxes, and more, and it’s nice to see those pots growing over time.
If anything unexpected happens, you’ll have an instant snapshot of where you could save money, and where you could make your money work harder for you (e.g. in high-interest savings accounts, or with safe investments). You get to look at the whole picture long-term and make changes where needed, which is really handy when there are short-term fluctuations.
Invest In Your Future
Just because this hustle is unpredictable, doesn’t mean you can’t invest in a secure future. You simply need to take advantage of the big wins when they come, putting money into retirement funds or pension plans that work with the way that your finances work.
Your Side Hustle Can Bring You Financial Freedom
By being smart and consistent with your financial habits, even when your side hustle is anything but reliable, you can transform your fluctuating income into long-term wealth. The strategies above should certainly help, but never lose your zest for knowledge—with each article read and personal finance course taken, you’re a few steps closer to the wealth and financial security we all crave.
