The Long-Term Spending Strategy That Helps Me Stay Self-Employed Through Dry Periods

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While no two people will make the same exact choices when it comes to money, identifying your basic money style can be extremely helpful. That’s why we work with our long-term friends at CreditRepair.com The Financial Diet came up with the Money Personality Matrix. Maybe you don’t fit perfectly into one category and fall somewhere between Super Scrimper and Intuitive Spender — the important thing is to be self-aware about your money habits and what motivates you to make good choices for your future. And no matter your money personality, if you’re struggling to get your credit score to where you want it to be, CreditRepair.com’s team can help. Below, writer Laura Marie shares the rules she lives by as a self-proclaimed “Frugal Fiend.” 

If you look at TFD’s money personality matrix, I fall pretty squarely into the “Frugal Fiend” category: monitoring all the money coming in and out of my home, creating complex wealth management spreadsheets with the help of my husband’s Excel know-how, and working to build my credit score since my early 20s. At its heart, my frugal fiend personality is really about a belief in uncertainty, though. I believe that, no matter how well-prepared I am for my financial future, there is usually room to be more secure, somehow.

For the first few years of being an adult, even a little security felt really good. When I was making less than $20,000 a year, every purchase counted in my pursuit of having something left over at the end of the month to save. As I’ve gotten older and more financially secure, though, the frugal fiend personality has given me more and more of a buffer via increasingly substantial emergency funds. Uncertainty in the world these days really highlights that “enough” of an emergency fund can vary widely for different people. I know that I could have to care for a family member without making much money during that time, or I could have an unexpected medical expense, or I could have all my income dry up in my freelance writing business.

That freelance writing business is a good example of my naturally cautious style: I wrote on nights and weekends while working a full-time job for nearly three years before I felt comfortable quitting and taking my freelance writing business full time. I had to get used to a variable income, as many of us writers have lately. I experienced about a 40% drop in writing income between March 2020 and April 2020, which is a lot to absorb in a budget. It’s easier, though, because I’ve gotten in the habit of saving a portion of my income every single month; that portion of the loss is much easier to stomach, since it wasn’t already allocated to a bill or a purchase.

For a long time, I saw daily benefits from the intensity that motivates many of my frugal behaviors. Now, I’ve formed the habit and keep working to save, both for the emergency fund and for mid-term goals, like adoption and college expenses for a future kid. However, it was forming the habits and frugality when it was hardest, with the lowest incomes I’ve had, that have made the difference. Here are four steps that I work through over and over, each time I experience a big change in income, to keep my emergency fund full.

Step 1: Start saving anything. Nothing is too small.

When I’ve had lean times income-wise, the key to beginning my long-term strategy is finding any wiggle room anywhere. Plenty of people don’t have this, I know, but I do believe most of us are working to find either better work, more work, or better-paid work when we’re stuck in those no-wiggle-room-in-the-budget seasons.

Starting to save, for me, had to do with the times I was offered paid side work that allowed me to boost my income higher than my day job was paying at that time. I am sure I had items on my “wish list” at that time, but I knew I was earning more, so I reasoned that there should be room to save, at least a little. So that’s what I focused on: no coin or dollar bill was too small to be saved.

Pro tip: Just like getting in the habit of saving, improving your credit score means developing and maintaining small money habits that add up to big changes over time. CreditRepair.com has years of experience helping customers get to where they need to be, credit-wise. Head here or give their team a call today to learn more.

Step 2: Notice, through budgeting, other categories that can be cut or slowed down.

I’m not immune to lifestyle creep; I’ve not retained my pared-down, budget-intense minimalism that began in my college years. But before adding a new expense to my budget, I try to ask myself if I can do it for less expense, or delay it, or live without it altogether. You may find that all of the things in your budget are essential, but through some soul-searching, I’ve delayed purchases, I’ve cut purchases, and I’ve found free ways to entertain myself in my spare time.

No one’s budget is identical, so I can’t recommend a particular part of the budget that has to be cut. But for many of us, there is at least one non-essential expense that won’t hurt your quality of life to reduce. That small amount of leeway creates the room for an emergency fund, even if it takes a long time.

Step 3: Move windfalls or increased income of any kind into savings.

As with most people, I couldn’t have formed a year-long emergency fund on cutting expenses; small savings here and there are a good place to start when you can’t immediately boost income, but it’s not a quick ticket to a big buffer.

Instead, I combined my intense budgeting mindset with noticing any possible increase in my or my husband’s income. Rather than using increases in income to get less attentive, I focused in, asking my husband how we wanted to spend the new, say, $44 per monthly paycheck that was coming with a cost-of-living bump to his salary. 

By opting to increase our savings by $44, we could boost our emergency fund by more than $1000 in a year. If we wanted to celebrate with a $10 luxury of some kind each month instead, we could boost that savings by only $32. Still, every “new” dollar got allocated, not just automatically incorporated into a more and more casual spending strategy.

Step 4: Treat your emergency fund like it doesn’t exist.

Over my 20s, $44 bumps and $200 bumps and bill reductions like paying off student loans have all conspired to create two things: our fairly simple, frugal lifestyle with few fixed costs, and an emergency fund that, in a pinch, could last us for more than a year.

If (or more realistically, when) I hit a road bump in life and spend down my emergency fund, I’d just move back to step 1 whenever I’m back on my feet. It takes a lot of privilege to get to the point of being able to save in bulk, I know, but just having that privilege isn’t enough to get to a full emergency fund. When opportunities do arise, it’s essential for me to recognize the difference between truly essential and non-essential expenses so that I can find small pockets where savings are possible. I also have to notice when raises/increases in income happen, so that they don’t get automatically incorporated into spending by default.  

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