July 2015 found me in Florence. To get there, I had penny-pinched for a year and a half so I could travel across Italy for 16 days with my younger brother. I saved $2,730 to take the trip, which was pretty impressive. Between climbing Il Duomo and drinking local wine, I had time to ask myself the big questions about life, love, and career. As I journaled outside a café one day, I finally realized what I wanted to do professionally: freelance editing.
I began editing as a side gig in 2013 and have maintained at least a minimal workload since. I live for working one-on-one with an author, and I fall easily into the rhythm of freelancing. It fits me like nothing else.
As I reflected during that European adventure, I knew: When I got home, I would start my journey of working for myself as a full-time freelance editor.
Before I could quit my day job as a community relations coordinator and start freelancing full-time, I realized I had to save money for another goal: building an emergency fund so I had a cushion to get me through the inevitable slow periods most freelancers encounter. To do this, I continued to build a client base at night while working at my current job during the day. This would allow me to put six months worth of take-home pay in an emergency fund to fall back on if business slowed once I was on my own.
Because of the low cost of living in my city of Jacksonville, Florida, this six-month safety net equated to $10,500. I started with $1,100 in savings and aimed to add $9,400 to it before leaving my day job. Because financial planners often recommend that freelancers with variable income stash nine months of take-home pay in an emergency fund, I plan to continue socking away part of my freelance income to reach this goal after I put in my two weeks’ notice.
The following are the lessons I’ve learned in the year after that Italy trip, or what I like to call, “How to Save $9,400 in a Little Over a Year (When You Make About $42,000 Annually).”
At first, I planned to stash away whatever I had left in my budget at the end of the month to reach my goal, just as I had for the Italy trip. So I started by cutting down on expenses. I would withdraw $200 each month for everyday spending and do my best to avoid dinner or drinks out once that cash was gone.
Anything leftover that didn’t go toward rent, bills, or other fixed expenses would be shifted into my “future freelancing” fund. The amount I was able to save fluctuated anywhere between $0 and $446, depending on the month.
By Thanksgiving, or about four months into my plan, I realized the limits of my “whatever’s left” mentality. There would always be an excuse to spend that extra money here and there unless I had a concrete savings goal in place. Moreover, I realized I couldn’t go more than a year at my current pace, working full-time and freelancing while also managing a startup literary magazine, keeping up with my friends and boyfriend and maintaining my physical and mental health.
To speed up the savings process, I needed to work backward–determining a set amount I could save every month, then building my monthly budget around that.
I did this by tailoring the 50/20/30 rule to meet my needs. At the end of each month, I reviewed my spending from the last 30 days. Then, I anticipated my earnings and expenses for the next month, distributing them over categories like housing, groceries, and savings.
Even with calculated goals, there wasn’t much fat to trim at first. I could only spare $110 from my regular paycheck each month for a while, so I had it direct deposited into my savings account. It wasn’t much, but it was a start.
The money I was saving really started to accumulate in March (nine months into my savings journey) when I refused to fall victim to lifestyle inflation.
Lifestyle inflation is when a person comes into extra cash and changes her lifestyle to spend that money instead of saving it. It’s a no-brainer to avoid. In fact, I was inspired by Detroit Lions’ wide receiver Ryan Broyles and his wife, who live on $60,000 annually and stash the rest of their earnings into savings and investments.
So when my boyfriend moved in with me and when I got a pay raise at my day job, I didn’t let myself get used to the freed-up extra money. Also, any extra cash I earned (like from an unexpected freelance project) went straight to savings. This way, I was able to put $500, then up to $900 each month, toward my goal.
Sometimes, life can be messy and unpredictable. I’ve had to cover surprise expenses for sick cats, blown tires, and other emergency charges that required transferring from savings to checking. These expenses will continue to pop up. But it’s all okay, because I remind myself that even if I take a step back, I’ve taken two steps forward by simply being a goal-oriented saver.
I do try to stay away from large, out-of-budget expenses, though. If an unnecessary outlay like a haircut doesn’t fit into a month’s budget, I’ll fit it into the budget for the following month. Even with some delayed gratification (and darker roots), I’ve lacked for nothing. For instance, I’ve found that when I don’t grab takeout every week, dining out with my boyfriend or having brunch with my friends feels special again.
When I make each month’s budget, I’m inspired to stick to it by evaluating how far I’ve come. I subtract the current amount in my emergency fund from my future savings goal in order to see how much farther I have to go before I can put in my two weeks’ notice at my current rate of savings and interest.
I feel like a kid counting down to Christmas! This practice has encouraged and motivated me along the way and has honestly made saving fun.
Anything worth doing is worth doing right, so I found a local CPA who specializes in small-business accounting. My accountant helped me establish an LLC to separate my business and personal finances. He also advised me on how much to pay in estimated quarterly taxes and when to give a client my W-9.
Accounting is the farthest thing from my two humanities degrees, so I am exceedingly grateful that a professional could take these worries off my plate. It has been well worth the $175 business expense to know I’m doing everything on the level.
Right now, I’m on target to hit my savings goal by the end of October.
Even though I’m in a middle-class income bracket, it’s been empowering to see that by budgeting, monitoring results, and hiring professionals, I’ve saved enough to launch my full-time freelance editing career before my 27th birthday.
Becoming a full-time freelancer is a new reality that’s full of challenges I’m eager to face. Instead of leaning on guaranteed paychecks, I will have to pay for anticipated expenses as earnings come in. I will commit to spending money on extras only after I meet my savings goal.
At first, this new lifestyle may cost more than my old one. I’ll have to shell out for an individual healthcare plan and hustle for each new day’s work. Ultimately, I believe the financial habits I’ve taken on won’t cease when I quit my day job. Instead, this experience has made me a lifelong saver.
My next goal might be a tour of Scottish whiskey distilleries to thank my boyfriend for his support during this process. It might be saving for a down payment on a house or possibly even financing a wedding. Who knows? If I’ve learned anything from this journey, it’s that with some smart planning and the support of others, I have the power to reach my goals.
This article originally appeared on LearnVest and is reprinted with permission.