3 Things That Freelancers Should Do to Help Their Finances


Freelancing offers a lot of freedom, but that freedom often comes at a cost — a financial one. If you’re a freelancer or you’re planning on becoming one, take a look at these three tips to help you manage your finances better:

1) Prepare for Drops in Income

There will be some months where you’ll make a lot of money and have no budgeting worries whatsoever. Other months, you might have a big drop in cash flow because of limited work or late payments.

That’s why you need to use your savings from those high moments to help you get through the low ones. Every time you receive more than you need for your essential expenses and taxes, you should stash some savings to help you when you get a sudden drop in income. You also can use these savings when you encounter a small emergency, like when your equipment breaks down and you need to repair it ASAP.

What if you’ve just started freelancing? If you don’t have any savings to rely on right at this moment, then you should consider going to a website like CreditFresh to apply for a personal line of credit. What’s a line of credit? It’s an open-end credit product that allows you to withdraw funds within your approved credit limit, which are then deposited into your bank account. Just remember that it should typically only be used when you need money to handle an emergency expense.

2) Prepare for Taxes

As a freelancer, you are responsible for calculating, collecting and making your tax payments. So, what can you do to prepare?

The first thing that you should do is look up the self-employed individual tax center on the official IRS website. It will let you know how and when to make your quarterly payments, along with how to file your annual return. Then you should set up a high-yield savings account. This is where you should stash the money for your payments. It should be at least 25-30% of your income, depending on your tax bracket.

What else can you do to prepare?

  • Look up self-employed tax deductions to see which ones you could benefit from
  • Always over-estimate what your payments will be. It’s better to have too much than not enough.
  • Have digital and paper copies of your invoices, receipts and contracts in case you get audited.
  • Get help from a professional accountant if you’re overwhelmed with this process.

3) Don’t Miss Out on Payments

One common problem that freelancers have is late, missed or incomplete payments. Sometimes, it will take months to get the paychecks that they deserve.

So, what can you do to avoid this tough situation? Here are some options:

  • Get some payment upfront, especially if it’s a large project. Ask for a deposit between 30% to 50% before committing to the work.
  • With long-term projects, ask for milestone payments over a lump sum at the end of the project.
  • Get it in writing. Don’t just accept an offer over the phone or in-person. You want a copy of a written freelancing contract so that you have proof of what you’re agreeing to do, what you’re going to be paid and when.
  • Send your invoice the moment that you’re done.
  • Send reminders if they’re late. Don’t be afraid to be pushy. That’s your income that they’re withholding.

Freelancing can come with a lot of financial obstacles. Following these three tips can help you move past a lot of them.


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