“I’d rather keep working in the hope of getting paid than stop working and know I’m not going to get paid.” These words, from a friend of mine who’s not getting paid by the company she’s freelancing for — the only project she has right now — might shock you if you’re on a nice steady cashflow. But if your income isn’t so stable, you might be able to relate to her sense of desperation.
Though I know no one’s immune from a recession, this conversation made me think about my own approach to the financial side of what I do. I started to think about what, if anything, I could do to try to cushion myself from the current (and future) economic turmoil. Here’s what I came up with.
1. I need a savings buffer.
Much of my work is short contract jobs, so I need to make sure I have enough money in the bank. I’ve seen a lot of talk about having a buffer that would last three months if you were out of work. That will be difficult to achieve, but it’s worth aiming for.
2. I need to pay my debts down, if not off.
Sometimes my credit card can get a hammering, so I’ve decided to pay it off every couple of weeks at the moment. This helps me avoid the “how-on-earth-did-I-spend-that-much” moments of truth that can occur if I leave it longer, and makes it easier to track my spending.
3. I need to track my spending.
I find it hard to save money if I don’t know where it’s all going, but I also find it nearly impossible to stick to a budget. I’ve taken to using my budget as a rough template for my spending, and simply tracking my spending against it. This approach allows for the variability of expenses from week to week and month to month, but also lets me work out where my money’s going, and find areas where I could be more frugal.
The budget’s invaluable on a day-to-day basis, but it’ll also help me make decisions if I’m asked to discount my rates or change my pricing structure.
4. I need strategies for finding new work.
I’ve been thinking that perhaps my wait-for-it-to-come-to-me approach to work won’t cut it if I’m out of work this time around. I’ve brainstormed a few ideas for finding work in markets that seem to be doing OK despite the downturn, and started networking with providers of complementary services that seem to be winning work right now.
Since I’ve done this, I’m also finding I’m more alert to potential opportunities and ideas that crop up as I go about my days, and I’ve started to keep a list of these so I don’t lose track of them.
5. I need to stay motivated.
With the constant news of unemployment statistics, redundancies and so on, it’s all too easy to get caught up in the doom and gloom. So rather than worrying, I’m trying to stay focused on the jobs I have coming up, and to feel reassured by my budgeting and any inroads I can make on my savings plan. When all else fails, I tell myself it won’t last forever — and I’m doing everything I can to stay in the game.
What are your tactics for keeping the wolf from the door?