Build Confidence with these 5 Financial Tips for Freelancers

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PUBLISHED BY Alwin Wong / February 5, 2021

5 Financial Tips for Freelancers and Independent Workers: How to Save Money and Manage Your Finances

Whether as a freelancer or an independent contractor under any variety of gig platforms, you tend to carry additional financial responsibilities in comparison to regular salaried employees.

You are making money on your own terms. And ultimately, you get to decide how you want to work, who you want to work for, and when you want to work… You are your own business!



And as your own business, you will need to manage your finances for business expenses, investments, cashflow efficiency, and learn how to save money as a freelancer. Even if you hire an accountant to manage your finances, knowing how to save money as a freelancer will provide you with a foundation for further career progression.

In this following article, we will go through how to manage self-employment income as a freelancer by introducing the following concepts:

  • Cashflow
  • Expense Separation
  • Emergency Funds
  • Break-even Scenarios
  • Business Spending



Freelancers should think from the mindset of a small business owner. Whether you are freelancing for supplementary income or doing it as a full-time gig, knowing how to manage finances as a freelancer early on will reduce anxiety and financial insecurities that may arise.

Freelance money management is a great skill and habit to develop as your career grows.

Itching to learn more? Here are our 5 pro tips to help you discover the best ways to manage your freelance finances!

Track Your Cash Flow

One of the most important financial tips for freelancers is to stay organized by keeping track of cash flow–either manually or with accounting software. When you treat your gig as a small business, you will take your finances seriously and know how to manage self-employment income. Money management for freelancers shouldn’t be any different from how an owner would run their business.

Cash flow is exactly what it sounds like–it is how money is moving in and out of your business each month. It’s understanding how much money is generated from your gigs and how it’s being managed. This is particularly important for gig workers as income can vary between months. If the cash flowing in is less than usual because of a slower season, you will have to bring your expenses down to make sure cash flowing out is always less. It is key to never spend more than what you have!

Tracking your cash flow will not only make tax season much easier for you, but it will give you a visual representation of your spending habits. Knowing exactly where your money is going will help you stay mindful of spending while helping you find opportunities to cut unnecessary personal or business expenses

In a survey conducted by FreshBooks, 72% of freelancers earning between $50,000 and $99,000 agree that managing and tracking expenses is on the top of their list of healthy financial habits to develop. You should keep a record of the money coming in from your business and the money going out for expenses. This includes everything from gas to transportation upgrades like getting an e-bike for your food delivery gig!

Separate Personal Finances from Business Finances

Another important financial tip for freelancers is to separate personal finances from business finances. Keeping the two separates will help you track income, expenses, and taxes. You can either open a separate account under your existing branch or find another branch to use for your business–whichever way you prefer to help make your life easier!

As a self-employed freelancer, it’s important to understand that your business income is not your personal income. The income you receive from a client or gig platform is still subject to tax deductions. Since you do not have an employer that regularly deducts taxes on your behalf, you will be responsible for filing your own taxes each year.

It was shown that only half of self-employed professionals are setting aside money to pay their taxes. Freelancers are not setting money aside for taxes because it can be time-consuming, complicated to do on your own, and a financial burden if you haven’t developed the habit of putting money aside.

If you don’t have an accountant to help determine how much in taxes to expect, a good rule of thumb is setting aside at least 20% of your income for tax purposes. Take this lump sum of money from your income and make sure it stays in your business account. Whatever is left over can be transferred to your personal account to pay yourself. This will assure you will only touch the money that is yours especially if you have difficulties managing unstable income and financial volatility.

Keep Expenses Low

Running your own gig will come with business expenses. This will depend on what your gig is and what you need to run it efficiently. For example, insurance and gas are two reoccurring expenses a rideshare driver will have and can expense during tax season. Expensing these business costs will help reduce your total taxable income.

Freelancers need to know that while business expenses can help lower the amount of taxes owed, it’s not free money. You will need to be mindful that they’re not complete write-offs and should try to keep expenses low. Try to only spend on expenses that are mandatory or will help optimize your business and bring in more income. For example, upgrading from a manual bike to an e-bike can help increase efficiency and bring in more money. This is a valuable business expense that can help your business grow!

If your goal is to save money towards your future, you should try your best to keep expenses low by reducing discretionary spending. Whenever you’re about to make a purchase, ask yourself if it will help move your business forward. If not, maybe try using the extra money towards other larger goals. Think big!

Know Your Break-Even Number

You should know how much money you will need to cover your essential expenses. This includes your living expenses such as rent and food, along with any other expenses that keep your business running. If you know how much you need to spend on your business each month, you will need to budget for that.

If you know you have at least $1,000 in expenses each month for rent, insurance, gas, and other living costs, then you already know the bare minimum you will have to make to cover that. This means your break-even number is $1,000 and you should aim to either break-even or make more to set aside for emergencies or savings. The ideal situation is to always have a positive number after subtracting your expenses from the amount of income you’ll be bringing in.

Knowing your break-even number will help you determine how much money you need to make. Since your income can vary each month, you may need to either diversify your income by finding multiple gigs or know how to save money as a freelancer.

Set Aside Money for Emergencies

Not only will you have to set aside money for tax purposes, but you will need to build an emergency fund and know how to save money when self-employed. This fund will be helpful when unexpected emergencies arise and give you greater peace of mind. Since you are a freelancer, you will not get paid for sick days or have health insurance coverage from an employer. Having a financial safety net will allow you to take a day off work or visit the doctor without additional worries so you can focus on you.

With your personal bank account, you can set a small amount of money to automatically transfer to your savings each month. Being able to automate this will help make setting money aside a priority. When you make transfers and keep this money in a savings account, it can slowly build interest over time and help you reach your financial goals.

These financial tips for freelancers will help you be more mindful and work towards your goals. Once you know how to manage finances as a freelancer, you will have better financial control and be able to run your independent career worry-free.

If you need financial help as an independent worker, we regularly create helpful resources. Join thousands of other gig workers and sign up to be a part of our community!

Alwin Wong

Alwin is the Growth Manager at Moves and a part-time freelance photographer. With the rise of the gig economy, he is excited by a world where people can have greater flexibility over their work and challenge the norms of having a traditional 9-to-5 job. Alwin is also an avid travel enthusiast and Toronto Raptors basketball fan.

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