How to Build an Emergency Fund as a Freelancer

Becoming a freelancer could be the first step to owning your own business for many people. It’s a chance to get a taste of what it feels like to be self-employed. Plus, you can start building a portfolio in your niche so that you can potentially launch a business as a service provider later too. Of course, becoming a freelancer isn’t without its challenges. If you’re going into freelance, you’re not going to have the reassurance of a regular 9-to-5 job with a consistent income to rely on. That means that you won’t always have the same amount of cash coming into your pocket each month. To protect yourself from the dry spells, you’re going to need an emergency fund. So, how do you make one? 

How to Create an Emergency Fund

Anyone can benefit from having an emergency fund – not just freelancers. It’s essentially an extra portion of cash that you keep aside in case of emergency. This money doesn’t go towards your savings goals, or your everyday expenses. Instead, it sits there in your bank account until you need it – like a safety net for when something goes wrong. 

In general, most people should have around 3 months of wages as an emergency fund to protect them from things like redundancy or sudden bills. However, if you’re a freelancer, then your emergency fund might need to be a little larger than that. Remember, you’ll also need enough cash to continue running your freelance venture too. Start by deciding how much money you’ll need to have aside in case you don’t make any income one month, once you’ve got that number, you can begin to look for places to gather the cash from. 

Funding Your Emergency Pot

Once you know how much cash you need, the next step is actually raising those funds. Your emergency fund should hopefully be in place before you start your life as a freelancer, so you can put extra money from your regular income aside while you know you have that security. If you’re freelancing already, just make sure that any time you make a little extra cash, you put it aside, rather than spending it immediately. You can also look in your budget for extra sources of cash. For instance, you can refinance your existing student loans into a cheaper option with a private lender to save you money on your monthly expenses. Refinancing old loans into better product is one of the quickest ways to free up extra cash, and you don’t have to compromise on your lifestyle either. 

Don’t be afraid to cut costs wherever you can in your budget, however. Look for opportunities to save money on bills by switching to different providers. Think about how you can reduce your costs each week by doing little things, like taking a lunch to work instead of buying one from the local café. The more you can dedicate to your emergency fund, the better. Once you’ve got this safety net in place, you can jump full-throttle into your freelancer business without having to worry about not being able to pay the bills.


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