Managing your money as a freelancer

Just like everything, freelancing comes with a price. And it’s not necessarily that you are going to have to work on someone else’s schedule or that suddenly you’ve run out of work, it’s that you need to handle your finances and handle them well. 

When it comes to small businesses and freelancers, you are the only person, aside from an accountant or a bookkeeper that can take care of your money for you. 

You need to make sure that you always have your financial freelancer house in good order. 

Here are some simple tips to help you get your freelance finance under control. 


Some people love spreadsheets and other people hate spreadsheets. Love them or hate them; they are a great way to help you track your ink on manually. 

You need to take some time every week and input what you have in terms of expenses and income. 

This will make it very easy to get those two all-important numbers contact time. How much you have earned, and how much you spent.

Many freelancers say they have no idea how much money they make because they have everything going into the same bank account, and household bills will come out just as much as tools for the job. Which means it’s probably quite difficult for them come tax time to make heads or tails of those numbers.

It is essential to keep that data fresh, but also going back over your records will show when your peak times are and if there are any dips. 

This means going forward; you can then prepare for those steps by saving money in advance.


One of the most enjoyable things about being freelance is that you can work with people worldwide. But this does mean that they’re going to want to pay most often in their currency.

People will often opt to pay in dollars as that is generally accepted everywhere, but by checking out the best foreign currency accounts, you can be more accommodating to your potential global clients.

Always keep in mind the exchange rate when you are working out payment terms if you’re working in another currency.


Budgeting might be one of the least fun things possible. And indeed, when you’re a freelancer and might not have that 50/30/20 method in place yet, it can feel quite a struggle.

However, using the 50/30/20 method means that you’ll have 50% of your income dedicated to paying for your bills, 30% can go to stuff that you really want to but don’t necessarily need, and 20% can go down to paying taxes and debt.

You may have a bit more debt than you’d like, in which case that 30% for stuff you want but don’t need could slide over and pay off any of those early.

It is vital that you set enough money aside for taxes, get used to saving between 10 and 20% of each invoice that you send to a client, so that way when taxes roll round if you do you have a hefty bill you won’t be worried about paying it. There are many deductibles and expenses that you can cut your tax bill down with – use them.


Insurance is going to keep you protected, and unfortunately, many full-time freelancers are not insured. This means that they are liable for much thought that if something should go wrong with one of their clients. 

Being without some insurance coverage as a freelance that can lead you into a lot of financial issues if something happens like in a medical emergency or an unexpected health crisis.

Here are a couple of insurance policies that you should think about.

Life insurance is probably one of the most essentials. If you don’t have a dependent or partner, then you probably don’t need life insurance as much as others. But if you do, you have dependence, and mortgage and a partner, then life insurance should be the bare minimum that you get here.

Health insurance depending on which country you live in, might be essential. There are many programs that you can typically choose between for each country; what is necessary is that you understand the impact that an accident or a medical emergency could have on your finances in the future. 

For example, if you were to have a trip or fall or a car accident, you’re not likely to be able to be back at your desk within a few hours; it might take much longer than that. In the meantime, your clients will begin to look elsewhere, and the bills will start piling up, including medical bills. 

Try to find a health plan with deductibles and something that can easily fit into your monthly payments.


There are several tools you probably need to do your job. Almost all of these will be wholly tax writable. But it is vital that you learn to keep track of them. Many freelancers have multiple smaller bills going out each month, and they don’t keep track of the total. At the end of the year, $12 or $120 is all possible deductibles you can keep an eye on. 

Sit down and make a list of all of the tools that you pay for every month, quarterly, or yearly subscription basis. Keep a note of these and see if you have made sure to add them in previous tax years. If not, it’s time to do so.

Your Rates

Almost all freelancers will start a little bit too low. And while this will get cash through the door, and pay those bills, it’s probably not something that you want to set the tone for the rest of your working career. Freelancers are in a position of control, and they can decide how much they make per project. In general, the workforce does not have that option, but it also means that freelancers are prone to undercharging. 

So take a look at the landscape for freelancers in the same creative field as you. And if you’re going to need to raise your rate a little bit (or a lot).

This does mean that some of your previous clients might not be open to swapping to your new rates, but there will be other clients that will be happy to pay the rates for someone who can do the job as you do. 

You can check out Glassdoor to get a rough guide for the annual an average salary for someone in your field, once you have that figure, then break it down into an hourly rate. And this should give you a rough rate.

It is also imperative to recognize that your skills and freelance might not work best with hourly rates; it could be better to charge by the project. Indeed, if you’re a writer and you write at speed, charging an hourly rate rather than per word might not work out for the best. 

Vice versa, if you’d like to take your time and do plenty of research but aren’t writing at those times, you will need to charge by the hour. It’s essential to understand what your needs are and how this can work with clients. 

Invoicing System

You can, of course, create invoices quickly in Google docs, Pages, or even in Microsoft Word. However, they do not have the software in the back to keep track of percentages, work things out automatically, offer follow-up emails for unpaid bills, reminders, and so much more. 

So an excellent invoicing program is essential for managing your freelance finances. 

Many people choose to use:

  • PayPal it’s quick, efficient and the charges are relatively low 
  • Bonsai is becoming more and more popular it’s not only sending invoices but can also track your time and some proposals amongst another several other task
  • Freshbooks is free and can create invoices almost instantly making it fast and effective
  • Wave is incredibly popular; this free invoicing software is designed for small businesses and freelancers.

It might take a little bit of time to find what works for you, but invoicing software is worth it, but it is also worth the fee if you choose to upgrade to the paid version.

What is important to remember is that your invoicing system should work well with your payment collection system. Many people offer very different payment options on their websites like Stripe, PayPal, instant transfer, and so many more. But each of these offerings gives you extra admin time. 

Most clients like to use PayPal, which is excellent as PayPal is secure and comes with the invoicing software. However, it’s crucial to use the payment collection system and invoicing system that works for you.

Managing your finance well as a freelancer comes down to organization and facing up to those numbers. 

If you are stuck in your head about bills old or not chasing up late payments, then perhaps it’s time you take a fresh look at your finances and tackle them properly once and for all.

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