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Making enough money from freelancing to pay your household bills? Great. But you need to ensure you’re making enough money to put some aside. I’ve already talked about saving for bad months when you have little or no work, and about saving for those unexpected expenses like major car repairs.

That’s thinking ahead – but not far enough. The third thing freelancers should save for is…

The Future

In the future, chances are that your life won’t look like it does now. Your personal circumstances may change, either by design or chance, and external factors that influence the world and your life directly may change things too. Technology, the economy and even climate change may affect your future, your job opportunities and the way you work.

Saving for your Future

It’s important to save for the life events or major purchases that may lie ahead. Rents and mortgage interest rates can increase rapidly, or you may need to move house, relocate or even move abroad. And while, depending on your current perspective and circumstances, either finding love or losing love may seem unlikely, both can happen! And both weddings and divorces can be expensive – as can new, shared homes.

Illness and disability aren’t things any of us like to dwell on, but as a freelancer, you don’t have paid sick leave, company benefits and return to work programmes to fall back on. Your monthly earnings have to be large enough for you to establish these financial backups independently.

Saving for your Children’s Future

You may not have children yet or even intend to have them. But sometimes, children have a way of appearing when you least expect it – and they’re expensive.

The Joseph Rowntree Foundation’s ‘Cost of a Child 2017’ report, published in August, found that the estimated minimum cost of bringing up a child from birth to her/his 18th birthday, excluding rent and housing costs, now stands at around £75,400 for a couple and £102,600 for a lone parent.

While some of this is covered by child benefit and child tax credits, there’s still no doubt that having children is an expensive business. It goes way beyond the cost of baby equipment, which can be scary enough, as can the cost of school uniform – once the sole province of secondary schools, uniform is now almost universal in primary schools and required in many nurseries and preschools, too. There’s also the cost of the ever-increasing number of books and amount of equipment that schools now require parents to buy, from basic stationery in primary school to expensive calculators and set texts for GCSEs.

The Perpetual Cost of Parenting!

Of course, for most parents, the costs don’t end at 18. The first car, the driving lessons, the rent deposit and the wedding are costly enough, but university is the crowning glory of the post-18 expenses. In case you’re unaware, the last, much-reduced remains of the maintenance grant were abolished in 2016. So, besides the £27-£28k your offspring will have to borrow for three years’ tuition fees, they will also have to make use of a maintenance loan to cover their accommodation, food, clothes, transport, household essentials, laundry, bills (mobile phone and possibly TV licence, contexts insurance and broadband), and any (pricey) textbooks and equipment.

Maintenance loans are means-tested and the maximum your child can expect (if studying outside London) is £8,430 a year if the household income is £25,000 or less; if the household income is over £60,000, they’ll get less than half this amount. And for most students, this won’t cover their costs. Accommodation alone will cost between £3,500 and £7,500.

None of us can know what the future holds, but it does seem unlikely that most costs will go down. But what is certain is that by saving what you can now, you can make the future less stressful.

Next time, I’ll be looking at why freelancers should be saving to take a break.


About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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