Why Freelancers Need and How to Build an Emergency Fund

Why Building an Emergency Fund is So Key for Freelancers Feast vs Famine of This Type of Work and How Freelancers Can Best Build the Emergency Fund Being a freelancer can be a rollercoaster ride. One month, you might have more work than you can handle, and the next, you might be struggling to find a single job. This feast or famine nature of freelancing makes building an emergency fund crucial. An emergency fund can help you cover your expenses during lean periods, giving you peace of mind and financial stability. Common Problems Freelancers Face 1. Inconsistent Income: Unlike salaried employees, freelancers don't have a steady pay check. This makes it hard to manage monthly expenses. 2. Unexpected Expenses: Life is full of surprises, and unexpected costs can throw a wrench in your budget. 3. Lack of Financial Safety Net: Without a regular income, its easy to fall into debt or struggle to pay bills when work is slow. #### Recommendations to Address These Problems 1. Set a Savings Goal: Aim to save at least three to six months worth of living expenses. This will give you a cushion to fall back on during slow periods. 2. Automate Your Savings: Use Money Squirrel or a banking app to automatically transfer a portion of your earnings into a savings account. This ensures you save consistently. 3. Cut Unnecessary Expenses: Review your monthly expenses and cut out anything nonessential. This will free up more money to put into your emergency fund. 4. Diversify Your Income: Consider taking on different types of work or clients to ensure a more steady income stream. #### Why These Suggestions Are Suitable Starling Bank: A mobile banking app that's perfect for freelancers and small businesses. No Subscription Cost: You don't have to worry about monthly fees eating into your savings. 247 Support: Access to help whenever you need it, which is crucial for managing your finances. Fast Payments: No charges for standing orders, making it easier to manage your cash flow. Highly Reviewed: One of the best reviewed banking apps, ensuring you get reliable service. However, some features like the business toolkit come at an extra cost, and cash deposits at post offices carry a charge. Plus, its an online only bank with no physical branches, and business accounts don't earn interest. Revolut: Another mobile banking app that's great for freelancers. Free Account for Sole Traders: Ideal for those just starting out. 247 Customer Support: Available both online and through the app, ensuring you're never left stranded. Multi-Currency Accounts: Hold funds in GBP, euros, and dollars, which is excellent for international freelancers. On the downside, deposits are not protected by FSCS, you cant deposit cheques or cash, and there are no physical branches. Also, business accounts don't have access to overdraft or credit facilities. Cashplus Bank: A solid choice for freelancers needing a bit more. FSCS Protected: Your deposits are safe. Fast Account Opening: Most accounts are opened the same day you apply. Overdraft and Credit Facilities: Potential access to these can be a lifesaver during lean periods. However, you cant cash in cheques or send international payments, and there's no 247 customer service or physical branches. ### Conclusion Building an emergency fund is essential for freelancers to navigate the ups and downs of their work. Using a reliable mobile banking app like Starling, Revolut, or Cashplus can make managing your finances easier. These apps offer various benefits such as no subscription fees, fast payments, and 247 support, making them suitable choices for freelancers looking to build an emergency fund.