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5 Ways to Save Money as a Freelancer

by Sara Meij

Saving money is an essential part of being a freelancer - and it usually involves not doing something. Don’t pay for unnecessary subscriptions. Don’t buy that new fancy tool you really want. Don’t buy ALL the coffee.

It’s not glamorous, but it is important. Some overhead expenses just can’t be avoided, so it helps if you’re actively aware how much you’re spending on overhead – and why.

Here are five ways I save money as a freelancer, both in business expenses and everyday living costs.

Track your expenses and set up a budget 

Ever wondered where all your money went when you didn’t think you spent much? It’s incredibly easy to lose track of spending throughout the month. From last-minute supermarket runs for that one item you needed for dinner to a few coffees and lunches out here and there - small amounts do add up. One of the most tried and true methods of staying on top of your monthly spending is to create a budget and, more importantly, to stick to it. A zero-sum budget is a way of organising your money so that every dollar earned is accounted for as soon as it hits your bank account. It’s easy to set up, even with a fluctuating freelance income. Combine it with a “must/need/want/savings” approach, and you have a well-rounded strategy for better money management.


Step one

Start by writing down all of your fixed overheads such as internet, electricity, mortgage/rent, insurances and the likes. This category should include all the items or services you must have in order to live. Figure out what minimum amount you’re happy to spend on groceries each week and add that too. For the need category, list everything you think you need on a monthly basis in order to live comfortably. Leisure spending money would be a large part of this category. It basically functions as a barrier if money gets really tight all of a sudden due to lack of work or, you know, a pandemic. You can cut cost by not spending money on anything in the needs category if it came to it, and still have a full fridge and power to turn the lights on at the end of the day. That’s the difference between need and must. 

Step two

After you’ve allocated funds to the needs and must categories, set aside a certain percentage of your monthly income that’s left to go into savings. It might be easier to save if you set aside a percentage instead of a fixed amount because your income can fluctuate greatly from month to month as a freelancer. What you save can be for a rainy day (an emergency fund), or a holiday, home deposit or anything else you want to save for. Having an emergency fund saved up is important because it allows you more breathing room in case of an emergency or unexpected lack of income.

Step three

The want category should list all the items or services you want to have on a monthly basis such as clothes, gym memberships, hairdresser or beauty appointments and the likes. Make sure it fits within the amount of money left in your budget after allocating everything from the previous categories. This is where living within your means really shines. Don’t have enough money left for that massage? Cut something else out or just don’t do it that month. Stick to your budget.


Shop around for energy and internet providers

How long have you been with the same energy provider? People don’t often switch utility providers, which is a shame because in many cases there’s money to be saved if you do. Consumer Powerswitch is a New Zealand website where you can compare energy providers and see which one would be the cheapest deal based on your energy consumption and area. 


Tax-deductible business expenses

Knowing what business expenses are tax-deductible can save you heaps of money at the end of the year. Keep track of your business expenses either in a spreadsheet or as part of your accountancy solution, and record the GST paid. Tax-deductible business expenses can include your home office, and a percentage of the cost of a work vehicle, phone and internet bills and work travel (including food consumed on the work trip). Talk to an accountant to get your ducks in a row on this one. Erring on the side of caution when deducting business expenses is advised as the IRD is not known for its lenience with tax mistakes.


Do your taxes on time to avoid a late penalty

Who wants to pay late fees? Literally no one. It’s in the same basket as parking fees and late credit card payment fees - it’s all money down the drain. Put a reminder in your calendar to pay your taxes ahead of the deadline, leaving enough time for yourself to get it sorted. Hnry automatically files and pays your taxes for you, so you’ll never miss a tax deadline ever again.


Keep track of time spent working

This tip may sound out of place in a list on how to save money. But by correctly tracking the time you’re working on assignments, you’re saving money too. Why? Because it gives you a realistic overview of the time you’re spending working. You can compare the time tracked against the agreed hourly or project rate to see if it is worth your time or if you need to increase your rates to reflect your commitment. This will also help you better understand how long certain tasks take, which will aid in accurately estimating project commitments next time you’re negotiating pay with a new client. Don’t forget that as a freelancer, you are also responsible for giving yourself a pay rise once in a while!


Wrapping it up

No one likes spending more money than they need to. So in short, don’t! Hopefully the tips above will help you streamline your finances a bit more, focusing on lowering your expenses and having a clear and realistic budget in place to help with day-to-day spending.


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