Why Freelancers Need Three Types of Savings for a Secure Future
When you're young or still trying to figure things out, words like "budgeting" and "savings" might seem a bit overwhelming. The idea of managing your money and setting money aside can feel challenging, and it often gets pushed down to the bottom of your list of things to do.
1. Savings as Your Safety Net
Imagine never being caught in a situation where you can't cover essential expenses. Even if you plan for the big bills, those small costs can add up quickly and unexpectedly, causing you a lot of stress. But you can be ready for anything.
2. Savings for Growing Your Business
For your business to thrive, you need to make smart investments. Think about spending your money on things that will help you earn even more. This could mean things like improving your marketing and promotional materials, getting better equipment, upgrading your workspace, or getting advanced software – anything that can take your business to the next level. It's like waiting until you're sure lots of people want your sewing before buying a brand-new sewing machine.
3. Savings for Retirement
Thinking about your retirement might not be on your mind right now, but it's something you should really consider. Unlike traditional jobs, freelancers don't usually have a company helping with retirement plans. You're in charge of planning for your future. There are different ways you can do this. For starters, you could look into something called a Roth IRA if you're just getting into freelancing or do freelance work sometimes. And if you're making good money, you might want to think about a Separate Employee Pension IRA – it lets you save more. There's also something called a Solo 401K, which is a bit more complicated but offers more flexibility. The important thing to know is that you have two "pots" where you can put money – one as your own boss and one as an employee. And remember, there are other options out there too, like investing in things that make money even when you're not working.
Don't Miss Out on Passive Income
Even if you're not working for a big company, you can still make money in different ways. This might involve the stock market, real estate, or even cryptocurrencies. It might sound a bit tricky, but there's a lot of help available. I, for example, find stocks a great option. As a college student doing some freelance work on the side, I can earn money without constantly worrying about it. When you invest money and let it grow over a long time, like for retirement, it can really pay off. You can find useful resources like YouTube videos, financial advisors from companies like Fidelity or banks, and even predictions about how stocks might perform – all these can help you make smart choices.
Remember, by having these three types of savings – for emergencies, for your business, and for your retirement – you're setting yourself up for a successful and secure future. So, take some time to think about how you can start saving today to make sure you have what you need tomorrow.