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How To Manage Your Money As A Freelancer: 9 Quick Tips


So you’ve decided to go out on your own and become a freelancer.

The only problem is, a major part of being a successful freelancer is doing the one thing nobody taught you how to do: manage your money.

This is the most undervalued part of freelancing. So many people think being great at their craft is enough—but it’s not. You could be the most talented graphic designer, writer, web developer, etc., but if you can’t run things like a business, you’re not going to be successful over the long term.

So, how do you manage your money as a freelancer? Here are 9 quick tips that will ensure you never have to go back to a windowless office again:

1. Keep an excel spreadsheet of all your income and expenses.

This might seem like an annoying exercise, but it’s a necessary one.

As soon as you “take the leap” and start living your life as a freelancer, you’re going to want to know how much money is coming in the door and how much is going out. One of the first things you should do is audit your current financial situation to set a baseline—so you know what your average monthly expenses are, and whether you’re consistently averaging over or under those expectations. 

2. In your excel spreadsheet, create tabs for future anticipated income.

The very next thing you should do is start looking at what work you have coming around the bend.

Most companies refer to this as “forecasting,” where they work to anticipate how much revenue they can “count on” in the coming months (and even the following year, or several years).

You should do the same. When it comes to freelancing, some months will be crazy busy, and others will be stagnant. And you’re going to want to have planned ahead for those slow months.

3. Immediately start living by the 10/40/50 rule.

A lot of people will disagree with me here, but follow my logic:

The 10/40/50 rule is how I’ve been managing my money for years, and it has never steered me wrong. 

10% of your income should go straight into savings (don’t touch this).

40% of your income should go into another account specifically for taxes (I’ll explain why this percentage is so high in a minute).

50% of your income is what you live on: rent, food, gym membership, travel, etc.

The reason why I recommend people break up their income this way, as soon as possible, is because the last thing you want to have happen at the end of the year is for you to owe more money to the government than you thought. Instead, tax yourself more heavily throughout the year, which forces you to live within your means, and guarantees you a nice bonus come tax season. 

4. Keep a close eye on your coffee expenses.

This might seem dumb, but as a freelancer you’re going to be living out of coffee shops.

Depending on where you’re at, financially speaking, two or three cups of coffee, five to seven days per week can start to add up. And that’s not counting the croissant you decide to get for breakfast, or the sandwich you splurged on for lunch. Especially when you’re first starting out as a freelancer, you want to keep as many of these costs to a minimum.

When you’ve been managing your money responsibly for a few months, and it’s clear you’re running a profitable operation, then buy all the mocha frappuccinos you want.

5. Open an IRA account and immediately set up automatic monthly deposits.

So many freelancers think, just because they aren’t working for a company, they shouldn’t (or “can’t”) start a retirement account.


In actuality, this is something you should be taking full advantage of, as early as possible. An IRA account is a way to start saving for retirement as an independent contractor, and the best way to get yourself in the habit is to just set up an automatic monthly deposit. Treat this as another tax on yourself. Don’t look at it. Don’t think of it as “money you could have had.” Just open the account, set the monthly amount, and check back in about 30 years.

6. To start building your financial portfolio, open a Robinhood account and set a second automatic monthly deposit.

Freelancing is going well, and you’re ready to start expanding your portfolio so you can build your net worth.

Stocks are a great way to start diversifying, and the easiest way to get started is to create an account with an app called Robinhood. You should treat stocks the same way you think about saving for retirement. Unless you have plans to become a full-time trader, don’t try to “time the market.” Just slowly accumulate stocks in companies you believe in, and over time you will reap the benefits. 

7. Allocate a portion of your income to business development.

So many freelancers pinch pennies in all the wrong places.

But there is a cost to being your own boss. And one the areas you’re going to experience that cost the most is when it comes to building meaningful business relationships. This means taking the time to meet with potential clients, customers, partners, etc., and being the one to offer paying for coffee, lunch, whatever—and knowing that the gesture is all part of what it takes to run your own business.

Don’t skimp here. The upside is always worth the $3.47 coffee.

8. If you’re “breaking even” every singe month, you have a problem.

Sometimes people forget that “breaking even” isn’t sustainable.

First of all, the whole point of working is to work, accumulate cash, and then use that cash as leverage to get yourself to the next level—whether that means investing in other income streams, upgrading your equipment (allowing you to earn more), etc. 

Second, if you’re barely “breaking even,” then what happens when you have a down month? How will you get through a dry period of no work? 

At a minimum, you’re going to want to always have 3 months of living expenses on hand, just incase. 

9. Always ask the question “How can I reinvest in myself?”

Part of remaining competitive as a freelancer is staying up to date and aware of the industry you’re playing in.

You’d be amazed how many people stop investing in themselves after college: they stop reading, they stop taking classes, they stop searching for new people to learn from, etc. But as a freelancer, it becomes your responsibility to stay at the forefront of what you’re doing, which means constantly reinvesting in your own education.

Pinch pennies when it comes to buying a new pair of gym shoes.

Not when deciding whether or not you should attend a paid workshop. 

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