Amid the typical bustle and hair-tearing stress of the holidays, I prefer to keep my professional life as relaxed as possible. That means taking off a few weeks from work at the end of the year. Adding the freelancer hustle on top of parties across town and last-minute shopping? That would only leave me drained and dispirited.
Mind you, this is quite a shift from my first few years as a freelancer, when I worked far more than I would’ve liked. Taking on last-minute assignments, coupled with the self-induced pressure of meeting my yearly income goal, upped the frazzle factor.
To actually enjoy the holidays, I’ve employed a few tactics to keep my money situation vacation-friendly.
Here’s how you can budget accordingly to take time off during the holidays:
Create a Separate Holiday Vacation Fund
First, set up a savings account that’s just for your end-of-year vacation. Note that this is a separate savings goal from your holiday-related expenses, such as gifts for the family, travel, and festive garb. Ideally, you should have a separate fund for that.
If you prefer to clump your holiday expenses with your holiday vacation fund, I’d recommend listing all your expenses for the holidays as well as gauging how much you reckon you’ll spend. That way you’ll know exactly how much you’ll need to sock away.
Save Well Ahead of Time
When you work for yourself, you don’t have the luxury of paid time off or sick leave. My spending plan includes taking off anywhere from two to four weeks a year for vacation, holidays, and sick days.
But what does a month of paid time off look like when your income is inconsistent?
You can figure this out in one of two ways. The first is to budget based on your living expenses. How much do you need to save to cover bills for a month? If you need $3,000 a month to cover rent, student loan debt, and insurance premiums, aim to save at least that much for your vacation fund.
The second way is to base your savings goal for vacations on your income goal for the year. So if you’d like to rake in $60,000 for the year, aim to save $5,000 to keep you in the flush. You can also divide your income goal by 11 months instead of 12. Using the $60,000 a year income goal, you’d want to earn about $5,500 a month.
Give Your Clients a Heads-Up
The holidays are an opportune time of year to take some time off because typically many companies are operating at a slower pace. Plus, more people are away. You’ll want to give your regular clients plenty of advance notice that you plan on taking some time off during the holidays. Make sure they get what they need from you before you scoot off.
See if your client prefers you to front-load assignments before you go on vacation. If you front-load assignments, that could bolster your income, which means you might take less out of your vacation fund than anticipated.
Tuck Away Money During Flush Months
Make the most of the “feast” cycles by putting aside a portion of your earnings toward your vacation fund. I try to sock away as much as I can. Once I set that money aside, I can focus on my other money goals such as saving for retirement. (It’s not terribly exciting, but essential.)
If you’re able, set aside a percentage every month toward your holiday vacation fund. If you need $5,000 by early December, that’s about $105 a week or $455 a month. If you’d like to go on a two-week holiday vacay, and are only aiming to stash $2,500, that’s about $52 a week or $227 a month.
Take on An Extra Work to Fund Your Vacation Time
I know, more work? But if you want to avoid stressing out over that vacation time, you can front-load If you have the bandwidth, consider taking on a new side hustle or additional client work, and putting the earnings toward your vacation fund. Don’t be shy about reaching out to your existing clients and letting them know that you’re available to take on more assignments. You only would need to do this until you’ve met your goal.
Hold Off on Your Retirement Account Contributions
Maybe it’s just because I hang out with a bunch of money nerds who max out on their retirement contributions for the year in August, but for some retirement accounts, you can technically hold out until the following year to make contributions.If taking time off during the holidays is a priority, consider holding off until the following year to making your full contributions. For instance, IRAs allow you to make contributions up until April 15th of the following year. So for 2019, you have until April 15, 2020 to make contributions for your IRA account. (Note: If you have a Roth or Traditional IRA, you can contribute up to $6,000, and up to $7,000 if you’re of the 50 and over set.)
If you have a Solo or Individual 401(k), the rules are a bit trickier. When it comes to employee contributions, you usually have to make them before the end of the year. But for employer contributions, you can wait until tax filing date of the next year. Of course, this is strictly a personal choice. You’ll want to carefully weigh the pros and cons of going this route.
Taking time off to relax during the holidays not only makes for a more enjoyable season, but it can also refresh and recharge you for the upcoming year. With a bit of prep and some tweaks to your spending plan, you can take that time off that you so deserve.
Jackie Lam is a personal finance writer. Her work has appeared in Investopedia, Magnify Money and The Bold Italic, and she’s been featured in Money, Kiplinger, Forbes and Woman’s Day. She runs heyfreelancer.com, a blog to help freelancers and artists with their money, and to balance their passion projects and careers.