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Money Monday: Managing Your Money as a Freelancer

So, you've decided - or are still deciding - to break away from the standard 9-to-5 cubicle job and enter the ever-growing world of freelance. Before you dive in fully, prepare to start managing your money more meticulously than ever before.

Managing Money as a Freelancer | Image source: / Photographer: BONNINSTUDIO

With your cash flow changing week to week and month to month, no bonus checks or raises at the year's end, no tax-withholding, or company matching your retirement contributions, and changes in health insurance options, you've got a lot to consider when it comes to your new financial situation. Dedicate some time to planning, discussing, and organizing your finances, and your career as a creative freelancer will be even more exciting, fulfilling and worth it.

Here are a few money tips to keep in mind if you’re ditching the office to work for yourself.

Create a Budget

Freelancing or not, budgets are the key to better managing your money. Taking the time to put it all out on the table will allow you to see what your current spending and saving habits are, and help you to determine how those might need to be adjusted in order to stay on top of your finances once you ditch the day job.

Unlike those receiving salaried or hourly pay, you’ll have to account for the fact that your income will vary week to week and month to month. It will be most beneficial to create a budget based on your projected cash flow and one based on the worst-case-scenario (read: you only land one job a month.)

Related: How to Create a Budget | Free Online Budgeting Tools + Worksheets

Start an Emergency Fund

Before diving into working from home, make sure you have a comfortable amount stashed away should things not take off as quickly as you predict they will, or a costly, unexpected situation arise. Experts agree that you should have 3 to 6 months of income saved up in an emergency fund, as this would allow you to live comfortably for that amount of time should job loss or medical crisis occur.

Related: Starting an Emergency Fund

Separate Business + Personal Accounts

The smartest move you can make from the get-go as a freelancer is to open multiple financial accounts and automatic transfers. Consider the following:

A Personal Savings Account

Or a couple of them. Once you’ve created an emergency savings account and gotten it to a place that feels comfortable, DO NOT dip into it unless it is absolutely necessary. Leave it alone and let it grow. This goes for additional savings accounts as well.

A Personal Checking Account

Here is where your spending money for the standard, non-work related stuff will go. Bills, groceries, entertainment, and so on.

Business Savings + Business Checking

Any leftovers you make from your freelance work should be placed into savings. The purpose of the money placed into a business checking (or spending) account would be to purchase office supplies and equipment and pay vendors, subscription costs, and other bills that are directly related to your business.


Something people tend to forget when they decide to become self-employed is that their income will not be taxed right away. Instead of getting money back at tax time, then, they’re left owing money to the government. To make it less jarring when that time comes, set aside money into a "for taxes" savings account on a regular basis, as if your income is already getting taxed, so you're not scrambling to come up with the cash in a matter of weeks come tax-time.


Not working for a company means no one will be matching your pre-taxed 401(k) contributions, but that doesn't mean you can't still invest in your future. Set up an IRA and place a portion of your income into it month to month to ensure your Golden Years will still shine once it’s time to retire.

Related: Business Accounts at 3Rivers | Personal Accounts at 3Rivers | Retirement Options at 3Rivers

Supplement Your Income

You might start off on a great foot financially in the freelance field right away, or it might take awhile to get there. Consider that, while your freelance career can still be your primary focus, you may have to pick up a part-time job or find other creative ways to supplement your income.

Related: How to Supplement Your Income Without Getting a Second Job

Track Your Cash

Pledge to be extremely diligent about tracking your cash flow. No one is a superstar at budgeting and personal finance – even after years of practice. But taking the time to record any and all income, documenting all expenditures, revising your budget, and seeking out personal finance tools and experts will help you find the groove of successfully managing your money as a freelancer.

You Might Also Be Interested In:  Want to Freelance? 3 Must-Do’s Before You Take the Leap | Your First 10 Steps to a Successful Freelance Career | 12 Essential Steps to Starting Your Freelance Business | How a Freelancer Manages Her Time, Money, To-Do List, and Despair | An Experienced Freelancer's Guide to Finding ClientsHow to Better Manage Your Freelance Income | A Freelancer’s Money Management Techniques

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