8 Crucial Financial Tips for Freelancers


The majority, if not all freelancers, dread dealing with the financial side of freelancing. It can definitely take the joy out of doing what you love, and of course freelancing also means you have to double as the financial manager. As frustrating as it might be, crunching the numbers doesn’t have to be a horrifying experience. Let’s have a look at some ways you can insure a secure financial future and still continue doing what you love to do – freelancing.


1) Don’t procrastinate 

Avoiding taking responsibility of your finances will only lend you in trouble, if not a financial disaster. It can be intimidating, yes. But the sooner you start the better, give yourself time to get set up. 

2) Be Organized 

You are a business owner; and it should be clear to you that you ought to separate personal and business expanses. How much did you spend on that night out, and that new laptop? To avoid a situation where you can’t keep track of your earnings and spending, you need to open up separate bank accounts or pockets (depending on the availability of such facilities within you bank).

  • Personal account – This is where all the money you need for everyday expanses like rent, groceries, petrol, school fees and stuff like that will be kept.
  • Business account – All payments from your clients will be received into this account and distributed into your other accounts; like a debit order to send a portion into the personal account as your wages.
  • Tax account – Unless you live on the moon, you need to pay your taxes. Figure out how much you will need each month for taxes; and deposit that amount into this account.
  • Savings account – VERY important. Because life is unpredictable, you must get into the habit of saving as much as you can. You don’t know when that geyser is going to flood the house or the child is going to fall ill.
  • Retirement – This does not necessarily have to be a bank account, but can be a retirement fund scheme or similar financial vehicle into which you deposit a set amount each month. This is best done early in life.

3) Get Life Insurance 

Yes. Death is a part of life, and planning for it will ensure that your family’s life style won’t be adversely affected in the unforeseen event of your death. The goal of life insurance is to provide a measure of financial security for your family after you die. 

4) Budget 

Outline a budget based on your monthly expanses and your income. You must know exactly how much money you need at the end of each month for all your primary expanses. WikiHow has a very easy but effective example here

5) Avoid Debt 

To define debt in simple terms—something owed for something borrowed or performed
Apart from the stress and frustrations this will cause you personally, the stress associated with excessive debt will affect your creativity, concentration and ultimately the decline or ruin of your business. Here are a few tips on avoiding debt:

  • Do not go above your spending limits
  • Always try paying cash if you can
  • Avoid impulsive spending
  • Try to avoid “buy now, pay later”, “interest-free financing”, they postpone payment
  • Compare prices before making major purchases
  • Keep a record of all credit card purchases

6) Keep Clear Records 

Knowing exactly how much you made, spent and saved is VERY important. Keeping records of your spending and earnings will enable you to calculate how much of your earnings should be allocated as your salary, how much can be saved and; how much can be used to grow your business.
Companies have dedicated accountants, but you have to be the financial record keeper, and make sure to keep invoices for your clients, spending on entertaining clients, internet service providers, hosting accounts or any other spending related to your business. 

7) Pay Yourself a Salary 

How you calculate this amount is entirely up to you, however. You can start by adding up how much you made last year and dividing that by 12 and that should give you your average monthly salary. You should use this monthly salary to cover personal expenses such as groceries and rent, like working people do. But if you spend everything you get, you are heading for financial failure.
No work, no pay. If you spend several days sick and bed ridden, you lose valuable time and possibly maybe fall back on projects that you were busy on. Such loses due to unexpected bouts of illness can have a huge financial impact. 
Maintaining a healthy life style, by eating well and exercising, will protect your income by minimizing the number of days you are unable to work and make money. 
Taking control of your finances as a freelancer is a big step, but one that you must take if you truly want to succeed. Keep learning and improving your knowledge about financial management, don’t delay taking action, be organized, plan for retirement and remember to take care of yourself. 


Further Reading 
Lovey Pale

Lovey Pale is a graphic/web designer who is living and working in Johannesburg, South Africa. His passions include writing and photography. Whenever he is not in front of the computer; you will find him enjoying time with his family or reading a good book.

By Lovey Pale

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