While some employers will pay for the equipment expenses of their teleworking employees, there’s only so much they can cover. Freelancers like myself have it in even tougher — they need to provide their own gear from the beginning. I guess the price of location independence is that we’re often on our own when it comes to these expenses.
Because of this, I’ve been building my own “teleworking expansion fund” over the past two years. I call it that because it allows me to expand the range of tools and skills that I have. The purpose of the fund is to cover work-related emergencies and pay for equipment and software, as well as the odd educational expense, such as books or seminars. My experience with my fund has been successful, and I recommend that you consider setting one up yourself. Here’s how to do it.
Know what your expansion fund is for. Defining the purpose of your fund can allow you to objectively rate if an expense should be covered or not. Is it for emergencies? For building your skills? For purchasing new hardware and software? Or is it for all of the above? Setting your objectives will make it clear.
Here are some instances where you might need to tap into your fund:
- Equipment repairs and replacements.
- Purchasing new software or web app subscriptions.
- Fixing and renovating your home office.
- Paying for books, resources, seminars and courses, which will add to your skills and expertise.
Find out how much you spend on teleworking each month. Do the math and add up all your teleworking expenses each month. Include app subscriptions, domain name and hosting fees, and telecommunications bills to your list. If you can, try to keep two to three months’ worth of these expenses in your fund.
Why do you need to do this? In case you find yourself in a financial emergency and strapped for cash, you still need to maintain all the services that you need to do your job. This is especially important for freelancers who might occasionally suffer from a dry spell.
Compute how much you can save. Based on your monthly expenses, how much can you set aside for your expansion fund? It might be difficult to compute an exact amount if you’re a freelancer or if you don’t have a fixed predictable monthly income. If that’s the case for you, then it’s best to think in terms of percentages rather than fixed amounts.
Don’t feel pressured to set aside larger sums, especially if you’re just starting out. Even 2 percent each month can add up to a lot over the course of a year.
Automate it. Many banks offer services that allow you to automatically send a specific amount from your payroll account to a savings account each month. The benefits of doing this are twofold. First, you’re forced to save regularly. Secondly, you won’t have to remember to do it it every month.
Having this type of fund, no matter how small, is a good way to both protect and enrich your career. If you haven’t built one yet, I encourage you to try it — starting this month.
Do you save a portion of your income for business and equipment expenses? What tips can you share with other teleworkers?