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Chapter
8

Create a plan to start saving

By now, you have a business bank account (or a plan to open a business bank account). You also previously calculated the minimum amount of money you need to cover your expenses each month. Now, you’re going to create a plan to start saving based on when you want to leave your job and start freelancing. 

When making a plan, remember that you’re saving money in order to feel comfortable going freelance full-time. By now, you should have an understanding of how much money is in your savings accounts and how much you need in your savings to leave your job. 

You don’t always have to make a hard transition — many freelancers have full-time or part-time jobs while they build out their freelance careers. It can be great to have consistent income each month, which can help to anchor your budget. 

How to track spend and save money

1. Make a budget and track your spending: Knowing how much money comes in and out each month will help you identify areas where you can cut back on expenses. Tracking your spending will give you an idea of what lifestyle changes might be necessary when transitioning to freelancing full-time.

2. Automate payments: Set up automatic payments for rent, utilities, etc, so you don't forget or fall behind on any payments. Automating this process also helps to reduce the stress associated with managing finances and ensures that you stay on track with your savings plan.

3. Cut back on unnecessary expenses: Take a look at what you’re spending money on and identify any areas where you can reduce costs. Consider alternatives such as borrowing items instead of buying them (like an outfit for an event or cooking supplies for a holiday) or even the small things that can add up, like downsizing entertainment costs by reducing the number of streaming services you pay for.

4. Generate more income: If you’re able to take on additional freelancing projects or other paid opportunities, consider doing so during this transitional period to increase your cash flow and help reach your financial goals faster.

Once you have saved the money and left your job, you may still want to keep certain checks and balances in place. That could mean setting up an automated payment from your padding account to your business account to cover your minimum salary or remaining somewhat cautious when it comes to “unnecessary” expenses.

Your savings strategy depends on how much you’ve already saved, how much you make freelancing, and what kind of lifestyle you want. 

Create a timeline to achieve your freelancing goals

  1. Write out a timeline based on when you want to leave your job. It could be a year, six months, or even three months from now.

  2. Set a target amount for how much you want to save each month, based on how much savings you need in total.

  3. Write down the steps you plan to take to get there. This could include: 

    • Cutting back on non-essential expenses.

    • Adding a few hours of work each month.

    • Saving your tax refund.

    • Saving your extra freelancing income.

    • Taking on an additional part-time job.

By taking time to save up an emergency fund, understand your tax obligations, and establish your freelance rate, you can enter into self-employment with confidence. 

You can use your salary and savings goals to guide your financial plan and help you decide the exact right time to commit to freelancing full-time. Preparing your finances will help ensure a smooth transition and a successful start to your new freelance career.

Leaving a full or part-time job to start freelancing can seem intimidating, but you’re doing all the right things.

Freelancing is an amazing career where you get to work with clients you love, on projects that interest you, and be your own boss. You’re on the right track, just keep hustling and you’ll get there!

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