Funding the Freelancer's Retirement

Virtually every financial expert on the planet harps on the necessity to save for your retirement. You already know you need to set aside money each month and you've looked into your freelance retirement options. The problem is that putting money away for retirement is easier said than done when your income fluctuates. So, you tell yourself you'll fund your IRA once a year to get that ever-important tax deduction. In fact, you've told yourself that every year since beginning your freelance career, yet your retirement fund remains at zero.

Unless you plan to slave away at your computer well into your 90s, perhaps it's time to reevaluate your budget and identify some cash for retirement.

Review the Priorities

Saving for retirement should be a scheduled event just like meeting deadlines and paying your taxes. Like any financial obligation, funding retirement deserves a line item on your household budget - or your business budget, if you have one. Just because you're your own creditor in this case doesn't negate the obligation.

Compare your budget to your actual spending. If you're like the majority of people, you spend money in ways the budget doesn't account for. Can you forgo half those trips to Starbucks if it means enjoying your old age? Probably. Will you fall over and die of boredom if you wait until a movie goes to video? Probably not.

Make a Habit

In the 9-5 job world, you can let your retirement plan zap the money out of your paycheck before you ever see it, making retirement account funding mindless. Depending on your job, you may even receive a nice annual bonus to fund your Roth IRA each year.

When you work for yourself, you don't have this privilege. You see each and every dime you make and must decide how to allocate every red cent. When you have bills to pay and kids asking for lunch money, it's not always easy to pay yourself first.

But you have to.

Set a goal for your retirement savings and stick to it. Even if you have to start out slowly, setting aside only $50 or $100 a month, do it. The power of compound interest and earnings can't get to work until you make that first deposit into your retirement account. Unless you have iron willpower, don't leave the retirement money in your savings account until the yearly contribution. Instead, look for plans that allow small deposits all year long. You'll be less likely to spend the money if you must incur an IRS penalty to access it.

Think in Percentages

When you set your goal, avoid thinking you need X dollars a year. At least, don't think that way at the beginning. When you first start freelancing, money may be tight and assignments may take longer than you plan. Having a hard dollar goal of $10,000 in the back of your mind that you know you can't meet is demoralizing. Once self-defeating talk sets in, you'll convince yourself that since you can't meet your goal, you shouldn't bother setting anything aside.

That's dangerous.

What if you told yourself you only needed to set aside five percent of your income? How would that change your thinking on the subject? Even if you have a slow month and make $1,000, you can set aside $50. In most cases, $50 isn't all that stands between you and eviction. $50 may not even be a dent in your family's food budget. What $50 can be, however, is a chance for your money to start working for you, rather than you always working so hard for it. That $50 alone won't make you rich, but it's a start when you add it to all your other small contributions.

Create Retirement Cash

As a freelancer, you may be in the position of struggling to make ends meet each month. In this case, survival trumps retirement. You can look for additional or better paying work, but there's no guarantee you'll find what you need.

When this happens, you must make your own retirement opportunities. If you spend your days writing content for other people, carve out an hour each night to write for yourself. Passive income from niche websites won't make you rich overnight - and if it does, let me know what niche you found - but it will build extra income over time.

Don't use this money to supplement your writing income or fund a night out. Instead, contribute every penny to your retirement account.

Seriously, don't you think you're worth one hour a day?