Be Prepared: How One Resilient Freelancer Built an Emergency Fund

What’s your game plan as a freelance writer for unexpected events and expenses? Do you have an emergency fund?

Imagine buying same-day international plane tickets to flee political violence with a toddler. It happened to me while I was freelancing in Nicaragua. And those tickets were expensive.

What about an unexpected medical bill? Could you take time off if a family member got seriously ill…or if you were ill yourself?

If your house burned down, could you put yourself up in a hotel and restock your toiletries, underwear, clothes, and food before an insurance payout?

Most people don’t like to think about all the possibilities that could turn an ordinary day of freelancing into a need for fast cash. But it’s bound to happen.

And when it does, being prepared can make all the difference between being stressed out and desperate or nothing more than a minor bump in the road called life.

Here’s how I built an emergency fund as a freelance writer:

Every freelance writer needs an emergency fund

Everyone should have an emergency fund. But it’s even more important for freelance writers, who generally lack things like short-term disability insurance, unemployment insurance and even paid vacation time.

If you struggle to build an emergency fund, you’re not alone. Almost half of Americans couldn’t cover an unexpected $400 bill. Don’t be one of them.

What’s an emergency fund?

An emergency fund is money in a checking or savings account that you can access immediately. But it’s set aside for…emergencies.

In the world of risk management and financial planning, building an emergency fund is a smart money habit that will help you avoid using high-interest credit cards and a lot of stress when the need for fast cash arises.

To clarify, here are some things that are NOT part of an emergency fund:

• A home equity loan pre-approval
• A retirement account
• Your stock portfolio
• Your collection of gold coins

None of the above is accessible at the airport as you’re plunking down $1,600 for same-day plane tickets from Nicaragua to Oregon to flee political violence, as I did recently.

Calculate your emergency fund needs

How much money should you have in an emergency fund? It depends.

A common rule-of-thumb is to have at least enough to cover three months of household expenses like rent, food insurance, utilities, gas and car-related costs, phone, medications, etc. However, you should also consider the following:

• What is the out-of-pocket maximum on your health insurance policy?
• What other resources can you access in case of an emergency?
• Do you have a significant other who could support you if needed?
• Are your parents and/or siblings alive and willing/able to help if needed?
• How many people depend on you and your income?

Personally, I want to have enough to cover out-of-pocket maximums for myself and my daughter, plus six months of living expenses. That’s about $22,000.

When I had to leave Nicaragua, I traveled straight to my dad’s house, where my daughter and I still live. That’s very different than if I had to stay in a hotel and then rent an apartment.

How to build an emergency fund as a freelance writer

Unless you routinely earn enough to cover six months worth of expenses in one month, building an emergency fund will take time. Here are three general strategies to follow:

1. Set a monthly goal

Allocate a specific amount of money towards your emergency fund every month. For example, set aside 10 percent of your income for your emergency fund. Or save a fixed amount every month. This is how I’ve always built an emergency fund.

2. Save unexpected income

Dedicate any windfalls, like a tax refund or unusually lucrative month, to your emergency fund. It’s tempting to spend that extra money instead of saving it, but when an emergency arises, you’ll be glad you did. Here’s how I do it:

• I used to have one recurring European client who paid me in Euros. That money was deposited in my French bank account, and I considered it untouchable except in emergencies.
• Now I have one recurring blogging client who’s work is between $800 to $1,000 per month. I funnel that money directly to my savings account every month, and I won’t use it for anything else until my emergency fund is fully replenished.

3. Move up and earn more

If you’re not making enough money to stack up money in an emergency fund, take a closer look at your rates, the type of clients you have, and your marketing efforts. It may be time to rethink your approach to freelancing so you can build an emergency fund.

How I’ve used my emergency fund

So why am I so fired up about emergency funds? I’ve had a lot of emergencies in the past several years.

Birth and death. Three years ago I was four months pregnant when my husband went to the emergency room with life-threatening blood clots. It turned out he had lymphoma. My emergency fund didn’t cure his cancer—sadly, no amount of money could do that. But a financial cushion meant that I could focus on taking care of him and then on dealing with my own grief when he died seven months after diagnosis.

Breast cancer. Then, my mom was diagnosed with metastatic breast cancer. She died just under a year after my husband. Again, that emergency fund meant a respite from financial worry while my mom was dying.

Political violence. Most recently, my daughter and I were living in Nicaragua when political violence erupted suddenly. After the city hall in our town was burned down four blocks from our house and thugs appeared on the streets overnight, I decided we needed to leave the country immediately. I was worried about a lot of things on the harrowing 4-hour drive past machete-toting roadblocks to the airport—but not about how I would pay for the plane tickets.

Build an emergency fund to be a better freelancer

Emergency funds don’t cure cancer. But they remove the financial strain from already extraordinarily stressful situations. A healthy emergency fund can mean being there at the end of a loved one’s life or just the ability buy a new washing machine and get on with your life.

Emily Omier is a freelance tech writer based in Portland, Ore. When she’s not working, you’ll find her goofing off with her two-year-old daughter.

Need help building an emergency fund as a freelance writer? Let’s discuss on Facebook and LinkedIn.

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