Finance Tips for Freelancers

Earlier this summer I wrote a guest post for Jean Chatzky’s blog giving a few negotiation pointers for those that are self-employed. Jean is the finance editor for the Today Show and runs a great blog chock full of financial advice.

Because financial security can impact how you negotiate–what you ask for, the compromises you’re willing to make–I asked Jean if she could share some financial tips that are specifically for the monetary ebb and flow freelancers face.

Here’s what she had to share.
JC Headshot - Money 911 - cropped
From setting your own schedule to choosing your own work environment, being a freelancer certainly has its perks. While there are positives, there are also challenges. One of the biggest? Managing an income that isn’t always consistent.

If you’re a freelancer, you know that jobs and cash might be plentiful one month and the next, you might be struggling to find work. Check out the tips below to make managing your fluctuating income a bit easier:

Track your expenses: For freelancers—and anyone for that matter—the first step to creating a budget that works is tracking your expenses. And I mean all your expenses, not just your necessities. Your gym membership, the occasional pack of gum, nights out—they all get factored in. Next, you’ll want to take your total at the end of the month and overshoot it by just a bit. It’s always better to overestimate what you spend monthly, rather than come up short.

Find your average income: If you’ve been freelancing for a while, take a look back at what you earned in the previous year and divide it by 12. If you’re new to the freelancing game, track your income for several months and determine your average from those figures. This will give you your average monthly income. Some months you’ll make more than your average—set that aside to help make ends meet during months that aren’t as lucrative.

Create a flexible budget: Now, take your average income and subtract your estimated expenses. If it seems like you’re cutting it really close, take a look at your budget and see if there are any expenses you incur on a monthly basis that you can cut. For freelancers, it’s a good idea to always have a monthly budget that’s flexible—if cash flow is above normal; it’s OK to treat yourself to a night out at a fancy restaurant. If work’s slow, you might want to skip it that month.

Save, save, save: While I recommend that everyone have an emergency fund, it’s especially important for freelancers. I typically suggest setting aside enough money to cover three to six months of living expenses. However, for freelancers, I recommend emergency funds have at least nine months of living expenses, in case you hit a drought.

About Jean: Jean Chatzky is a best-selling author and award-winning personal finance journalist. She is the finance editor for NBC’s Today show and blogs at You can also find her on Twitter at @JeanChatzky.

By photobunny via

By photobunny via


Thanks, Jean!

Here’s my favorite tip for saving with a variable income:

I split every client payment into three accounts: my business savings for taxes and other needs (18%), our family savings account for emergency expenses (10%), and the remainder (72%) is deposited into my business checking account for my day-to-day business needs.

I liked the automatic savings I got to do when I had a regular paycheck and wanted to create something similar that accounted for my fluctuating income.

Do you have a favorite tip for managing a freelance income? Please share it in the comments below!

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2 responses to “Finance Tips for Freelancers”

  1. Jacob says:

    Has anyone heard of – a new freelancer invoicing tool. Pretty easy and simple. Better than Freshboooks or excel. I just started a free 30 day trial.

    Does anyone use other simple tools like

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