Smart Saving: Ways To Budget For Taxes As A Freelancer
By Davis Clarkson , May 27 2020
Do you freelance? If you do then you'll know how great it is. Traveling the world and working hours that suit you allows you to organize your life around your work rather than the other way around like most people. One aspect of freelancing that is not great is freelancer taxes. As the saying goes, two things are certain in life: death and taxes.
If you are wondering how to budget for taxes as a freelancer then don't despair. There are several options available that can make your life easier. Here's our guide to taxes for freelancers.
1. Use A Budgeting Tool
One proactive budgeting step you can take to ensure that you have the funds available to cover your taxes is to start using a budgeting app. This can help you see more clearly how you spend your money. It divides your money up into pie charts and spreadsheets. You can see exactly how much money you spend in your favorite stores such as Starbucks or how much money you spend on going out compared to on bills or other important goods.
You can download an app and connect your bank accounts to it so you don't have to input the data manually, or you could set up an account with a new digital bank like Monzo or Revolut. The budgeting tools are built into these apps and allow you to categorize each payment you make. You might find that lots of your money goes to taxes.
If so, consider moving to a state with no income tax. Alternatively, you could even hit the road and travel to a different country for a few months where the cost of living is a lot cheaper.
2. Brew Your Own Coffee
We all love coffee. This is why brands like Starbucks are so successful. We spend so much on our flat whites and our lattes that we sometimes don't even think about it. Over a week, month, or year, the $4 or $5 we spend each time could stack up to cover the cost of a big chunk of our taxes. One solution to this is not to drink out as often. But this can feel depressing as you are deprived of your daily caffeine intake.
You can plan your visits to Starbucks strategically, allocating only a certain amount of meetings each week. If drinking coffee is part of your routine then be sure to brew your own coffee instead. You can prepare it the night before and warm it up in the morning so you can drink it rather than having to pay to drink it out.
Click here to begin creating your pay stub
One of the barriers to this is purchasing the right equipment. You will need a coffee press and a machine to brew it. You may also need some coffee beans or coffee powder depending on your taste. This all costs money upfront, but once you have spent it, you will save money in the long run.
3. Learn To Cook
Another big spend is eating out or delivery. We all love going to our favorite restaurants and having our meals cooked for us, or perhaps you're a fast-food junkie. The reality is even if we find cheap places to eat, it still stacks up. If you work as a freelancer then you have no excuse but to cook your own meals as you have the time to, particularly if you work from home. You can cook up delicious food like these cheese dishes.
Get into the routine of doing regular grocery shopping so there is always food in the house for you to cook, and so that you have options. Always do the washing up as soon as you've finished eating to avoid it stacking up, which can cause you to feel overwhelmed and go back to your old ways of eating out. If washing up is a struggle then invest in a dishwasher. Save up for it or buy a second hand one.
What if you are not a good cook? Understandably, you would not want to cook your own food if it was disgusting. You could invest in some cooking lessons or you could ask a friend or family member to show you how to cook or try out some youtube cooking videos.
4. Use Blankets And Turn Off The Heating
One of the biggest costs is the amount we pay towards bills. Heating is a big one. Depending on where you live and the time of year, you could have the option of turning off your heating, particularly at night. Instead, invest in some blankets and a warmer duvet as well as warmer clothes. Over the year, this could end up saving you thousands of dollars.
If you spend a lot of your time working in the house, consider investing in a co-working space. This could be cheaper than paying for the heating in your own house, and some of them even have deals for free coffee, saving you the money you would have spent drinking coffee out. Another great place you could work that will have its own heating system is the library. See if there is a public library available near you.
How To Save For Taxes As A Freelancer? Be Smart
After reading these tips, we hope this gives you an idea of how to cut down your cost and start saving up a bit so when tax season comes, you are ready and able to pay up. Don't forget you can also create a quick proof of income right here. Create a pay stub for keepsake and save up on those dollars!