While there are many advantages to freelance writing, there are some disadvantages too. The biggest problem is probably the uncertain income. You know what I mean-one month you’ve earned twice what you need to live on, the next barely enough and the third not nearly enough. It’s enough to drive a write crazy.
It doesn’t have to be that way. You can take steps to smooth your income without giving up the freelancing life.
Understand where you are. Track your income and expenses – if not forever, for at least a month. Make a list of all that you owe and find out how much it’s costing you in interest. Check your credit score. Pay particular attention to your medical insurance, and retirement savings. Use this information to understand exactly where you are financially. You’re now in a position to make good decisions about what you want to do.
Consider adjusting your spending. Tracking your income and expenses for a month or longer gives you a chance to spot money leaks. The classic example is discovering you’re unconsciously spending a ton of money on coffee – which can happen. My money leaks tend to happen more in the grocery aisles than over coffee. The goal isn’t deprecation, but getting conscious of what you’re doing. Usually there are some money leaks you can plug without feeling your giving up anything worthwhile. Any savings you find should go straight to one of your savings accounts.
Increase your savings. In addition to saving for taxes and retirement you need a savings account that’s there just to help you smooth your uncertain income. It can make sense to have three savings accounts. I call the account I use to smooth my income my prudent reserve account. I fill it with at least 10 percent of any income that comes in even if I know I’m going to turn around and take it out the next day. It’s the savings habit that works for me. The goal is to have at least three month’s and preferably six month’s income in this account. It’s amazing how having savings makes it easier to negotiate too – with savings you’re not coming from desperation.
Find regular paying gig or two. Having a writing job or two that pay $x amount every month helps steady your income flow. You know you can count on at least that amount ever month. Don’t use this, however, to skip savings. As near as I can tell every writing job comes to an end at some point. Chances are you’ll want to dip into your prudent reserve at least a bit when this happens.
Raise your rates. Upping the amount your charging for your writing will increase your income. In fact, such a raise often will result in new clients who are willing to pay more for the quality writing you offer. Exactly when and by how much you should change your pricing structure depends on lots of things. One super trick is to put all of the raise you’ve given yourself into savings. If that seems too much, put half in. It’s really fun to watch your savings accounts grow.
When you know where you are financially, when you put a regular savings plan to work you’ve gone a long way toward smoothing out your freelance writing income.
How do you smooth out your writing income?