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How to Manage Finances as a Freelancer | Tips on Freelance Money Management

For Freelancers the problem of handling their finances is magnified by three key factors:

1. The money that Freelancers receive monthly might not be fixed

For some Freelancers, especially those who are just starting, the amount of income that they make per month might vary. There could be months where there are a couple of great projects, while there might also be some months where there are no new clients to work with.

By having a varying amount of income, the budget of a Freelancer might not function as expected, thus increasing the difficulty of handling his finances.

2. Lack of company benefits

If there’s one clear advantage of being an employee, it is the range of corporate benefits that are being offered to its staff. In addition to their basic pay, employees can also be covered by health insurance, paid leaves, government contribution, bonuses, and a lot of more.

Now, these perks are normally not available to Freelancers who work with different clients. Without these benefits, a Freelancer still has to allocate their funds just to prepare for needs like medicines, hospitalization, and travel expenses which are typically provided to a corporate employee.

3. No urgency to establish an emergency fund

Every wealth coach or financial adviser talks about the importance of setting up an emergency fund. If the term is new for you, an emergency fund is defined by Investopedia as an account used to set aside funds needed in the event of a personal financial dilemma, such as the loss of a job, debilitating illness, or a major expense.

When you don’t have the urgency to establish it, then there’s a high possibility that you won’t be prepared whenever dire circumstances like those mentioned happen.

I hope that I sold you on the idea that as a Freelancer, you must be good in handling your finances. But if you are like most people, then you must also don’t have a lot of ideas on how can you get better in doing it.


Here are five useful ideas to get you started:

1. Use the Saver’s Formula and Stick to it

For a lot of individuals, the first thing that comes to their mind whenever they have money in their hands is where will they spend it. They think about the things that they want to buy, the bills that need to be paid and will just save whatever’s left after they spend it.
Thus, their formula in money management goes something like this:

Income – Expense = Savings

However, financial advisers will agree that this is not a wise way to handle your finances. Robert Kiyosaki, in his book, Rich Dad, Poor Dad, introduced a new formula. It is spelled out as:
Income – Savings = Expenses

It puts priority in saving your money before spending it, and it helps you to build your emergency fund faster.

2. Create a Spreadsheet to Monitor Funds

Before you react, let me assure you that I’ll be talking something that is absolutely simple and doable – even if you don’t know how a spreadsheet works. But first let me say that if you don’t monitor where your funds come from and where it goes, then one day you’ll wake up, and all those funds are gone.

Using a Spreadsheet to monitor your money is fairly simple. You just need to divide the Spreadsheet into two. The left side is where you input all the money that goes in, and the right side is where you record all the money that goes out. Then, at every transaction, you’ll have an idea of the running balance of your money.

To make it a lot easier for you, here’s a Spreadsheet where you can begin.

3. Increase your income by being selective on projects

You know what’s harder than learning to manage your finances? It’s managing your finances when you don’t have anything to manage in the first place. As a Freelancer, it is one of your duties to make sure that you only work on those projects that will advance your career and pays well.

Don’t let yourself be caught up in working with clients who don’t see your worth as a Freelancer and are not willing to pay accordingly for your expertise. When you become selective and choose only those that pay well and challenge you to grow, then you can also increase your income accordingly.

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