I speak to many freelancers who tell me they don’t have any savings. Since I’ve been freelancing for many years and already know how freelance finances work, this boggles my mind. The truth is, my ability to prioritize savings has saved my behind more than once.

The problem is most people don’t realize they need savings until they actually need them. In an effort to help you avoid stress, here are just a few reasons why freelancers must prioritize savings.

You have variable income.

Freelancers need to prioritize savings because they have variable income. That means you can make a lot of money one month and nothing the following month. Granted, I’ve never actually made nothing in a month, but I’ve certainly seen my income vary by thousands of dollars in a 30-day period.

This is especially true in the beginning when you’re still figuring stuff out. You don’t yet know the cycle of your business. You’re also still probably learning sales. And, finally, you probably don’t have multiple streams of income yet.

In other words, your income will be a rollercoaster until you figure this stuff out. As a result, you need to prioritize savings.

Emergencies happen.

The next reason why freelancers must prioritize savings is because emergencies happen. Sometimes it’s a little emergency like a small car repair. Other times it’s a huge emergency like a natural disaster.

For example, last year I experienced Hurricane Irma. I was derailed for about a month due to hurricane prep, the actual hurricane and then recovery. I was lucky to get power back in four days but it would be a week before I had access to internet.

My point is this: Things happen. Emergencies are not a matter of if, they are a matter of when. That’s why everyone, and freelancers especially, must prioritize savings.

Retirement is important.

One often overlooked part of freelancing is saving for retirement. After all, we don’t have access to an employer-sponsored 401(k) plan. We do, however, have access to individual retirement accounts.

In addition to emergencies, freelancers need to prioritize savings for retirement. While many of us don’t see ourselves having a traditional retirement, that’s what we say now. Additionally, what if you want to take it easier later in life? Or, what if you can’t work for whatever reason?

Cash flow can vary.

While you may try your best to make sure you have steady cash flow, that’s not always the case. For example, I recently had to pull from savings because a few client payments were late. If I didn’t have that money, I wouldn’t have been able to pay my bills on time.

Additionally, I lost a long-term client due to the project being shelved. These types of things happen all the time in business, which is why you need to prioritize savings.

Final Thoughts

Cash flow, emergencies and long-term planning are just a few of the reasons why freelancers need to prioritize savings. The good news is it is easier than you think. For a great book on the subject, check out The Money Book For Freelancers, Part-timers and the Self-Employed.


Amanda Abella is a full-time writer who specializes in online business and finance. She's also an online business coach and the Amazon best-selling author of Make Money Your Honey.

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