“Feast or famine” – an accurate portrayal of the self-employed lifestyle. Independent contractors and self-employed folks have more to think about when it comes to managing money. The contracts start and stop, the hours are tottery, and the tax situation is… weird. Freelancers are 50% more likely to outsource their taxes than traditional employees due to the sheer headache of it all. A 2018 study concluded that almost 50% of all self-employed professionals averaged across several salary ranges maintain a budget. What’s more, the highest-earning brackets saw over 70% of independent workers who tracked expenses throughout the year. In other words, independent workers have their attention on their finances.
No matter how you cut it, the self-employed must make a habit of being frugal to save money. The good news is, there are several ways to save money as an independent contractor. In this article, we discuss how to be more frugal as an independent worker, even including frugal living tips from the great depression.
6 Frugal Living Tips for the Self-Employed
1. Reaffirm Your Lifestyle
Seriously. Innovation and inspiration surrounding your circumstances will come first through situational awareness. If you’re self-employed, it’s most likely because you’re aware of the benefits of a self-employed lifestyle: time flexibility, workspace flexibility, financial freedom. Saving money can be tough either way, but it becomes a lot easier with a good reason behind why you’re saving money. Knowing how to live frugally should be a process of inductive reasoning – from lifestyle goals to financial incentives, to support said goals. So as you enjoy the perks of independent employment, keep in mind what it takes to walk the walk. Take proactive steps, prioritize your desires, and believe in what you’re acting upon.
2. Keep a Budget
One of the more obvious tips on how to be more frugal. The better you are at honoring your budget, whether loose or tight, the better you’ll be at holding onto money. A great budgeting tip for independent contractors is to set up a separate account for all business expenses. Thereafter, set reasonable limits on both business and personal expenses. This can best be done by calculating your annual salary, including the high and low seasons of your business. From there, do the math to find out your monthly salary. This will make cash flow management easier and help out lots when filing taxes and calculating tax deductions.
Lucrative self-employed business owners will benefit from keeping a balance book including all incomes and expenses. Set caps on your spending categorically (necessities, leisure, food, etc.) Balance out the books each month, and if you go over your limit, make up for it the following month.
3. Save on Food
Food is next on the list of the best frugal living tips. First and foremost, you’ll never (almost never) save as much money on food by eating out as you will by cooking at home. So learn to throw down! There are some great affordable home food-delivery services that send ingredients and instructions right to your door. For even more frugality, do your own grocery shopping – save coupons, find sales, shop in bulk. Pack food instead of ordering lunch. Learn the stock-up price or the lowest price an item is usually sold for, for your go-to staples. Lastly, make sure to use up everything! Concrete meal plans will help with that. Sudden outings with friends thwart your weekly dinner schedule? No worries. Freeze leftovers until you’re ready to continue as planned.
Pro tip: If you have outdoor or indoor space, keep a garden where you can grow your own food. Cucumbers, lettuce, and tomatoes are pretty easy to cultivate, so you’ll never have to worry about a side salad again!
4. Follow the “Eye for an Eye” Rule
Here’s one of the more hardcore frugal living tips with a big impact – and it works. The idea here is the same as always: you’ll lose exactly that which you gain. That’s excluding gifts from others, obviously, but everything you purchase is fair game. This rule is particularly useful when buying clothing and accessories. For example, if you choose to buy a new shirt for yourself, you must throw away one of the shirts you already have! That’s usually enough incentive not to buy, or to only buy when absolutely necessary. Ask your spouse or a friend to hold you accountable so that you stay honest in your biddings.
5. Invest in Things That Will Last
When the time comes to spend money, spend frugally by making it a worthy investment. This tip on how to be frugal concerns all expenses, but is especially useful for business expenses. One of the best things about being self-employed is the sheer availability of tax-deductible costs. When the time comes to buy a new copier, invest in one of good quality that will last throughout the years. It’s best to choose those things which are necessary for your business to operate, but also useful in your personal life. Lastly, consider the long-term costs associated with anything you buy; that wonderful copier may come with hefty electrical costs, for example. Although repairs and depreciation are tax-deductible expenses, there are specific stipulations to the process, so it’s best to avoid the paperwork.
6. Live a DIY Lifestyle
Here’s the last of our frugal living tips. Lots of greenbacks will be saved by adopting a DIY lifestyle. When something cracks, patch it up the best you can. Find an alternative use for something which would otherwise be trash. Look up instructional videos on how to fix your fridge before calling the technician. Make use of some clever home hacks instead of purchasing unnecessary accessories. Just avoid the excess spending on pre-made things which aren’t wholly necessary to your life—it makes a huge difference.
Pro tip: If you’re a hobby artist wondering how to be frugal and happy, have your artwork work for you! Create an online store on a website like Etsy and sell your crafts there. You can also market your DIY creations on public marketplaces like Facebook and eBay.
However, at the end of the day, if you do find yourself needing financial assistance to help pay off some business expenses, check out Moves! We’ve always got your back.