What
Build up an emergency fund which can cover any time you’re not available to work - aim for a minimum of three months, but ideally six months, to protect against any emergencies or loss of earnings, or simply to create a sense of security whilst building your business.
Why
There’s minimal certainty and regularity in self-employment. Even the most talented of freelancers will have periods of time where they cannot work.
Having an emergency fund creates some security should things not pan out as you expect them, and give you some time to look for solutions and not force you into making snap decisions.
We recognise not everyone has the luxury of being able to put money away, but the reality of freelancing is that you may have weeks or months where you are not earning any income at all. If you cannot afford to build up an emergency fund, consider carefully whether you can afford to go without work for a period of time.
How
If you don’t already have an emergency fund, start to build one up now, ahead of going freelance. It’s easier to do this whilst you’re in employment, as you can forecast your income a little more accurately.
Most experts will recommend between 3-6 months of emergency funds, and aim to have this buffer before you start freelancing, and if you need to dip into it, remember to top it back up.
You can put your emergency fund into an interest bearing account, so you can be earning from the fund too.
