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Taking the leap into freelancing is exciting, but it can also be a little terrifying. While being your own boss has tons of freedom, it also means you’re solely responsible for getting work done and managing your money.

From paying quarterly estimated taxes to finding your own health insurance, you’ve got unique financial challenges when you go freelance. To help you meet them, we’ve put together nine tips on financial planning for freelancers.

1. Separate your personal and business bank accounts

When you’re a freelancer, you’re running your own one-person business (unless you’re subcontracting work to other freelancers, in which case, nicely done!). Since you’re running a business, you need to have a separate business account.

That way, you can track your income and business expenses without getting them tangled up with your personal expenses. You’ll have a much easier time seeing if you’re meeting your income goals and investing enough (or too much) into your business.

Plus, you’ll be able to easily keep track of business expenses, which you can potentially claim as deductions when tax time rolls around.

2. Automate money into an emergency fund every month

One of the toughest challenges of freelancing is dealing with an uncertain income. You might make a lot one month and be left scrambling to find work the next. That’s why it’s crucial to have a savings account to get you through the dry spells.

Consider opening a separate account as your emergency fund or rainy day fund, and automatically funnel some money into it every month. That way, you’ll be able to make it through a month or two when you can’t find much work or run into an unexpected expense.

And you’ll be able to cover an emergency expense without going into debt.

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3. Set aside 25-30% of your income for taxes

When you’re an employee, your employer automatically takes taxes out of your paycheck. But as a freelancer, it’s your job to set aside money for taxes. If you spend it, you’ll be in trouble once Uncle Sam comes asking for his share.

Prepare ahead of time by setting 25-30% of each paycheck aside for taxes, which may include income tax and a self-employment tax. Don’t think of it as money you’re losing, but rather as money you never had. You’re just holding on to it for a little while.

4. Stay on top of quarterly estimated taxes

Another tricky part of freelancing is paying quarterly estimated taxes. As an independent contractor, you might have to pay taxes four times throughout the year, instead of just once.

Check out these IRS rules to learn more about quarterly estimated taxes and determine whether you have to pay them. If you do and miss the deadline, you might have to fork over a late fee.

Dealing with these taxes might be confusing at first, but as with anything, it will get easier with practice.

5. Design a budget and check in with it regularly

Since you’re likely managing a fluctuating income, it’s incredibly important to design a budget and track your cash flow. Write down your income and expenses, and set goals for your major spending categories.

If you’ve been freelancing for a while, you might look over the past year to estimate an average monthly income. You could also try different budgeting strategies to find out which one works for you.

The popular 50/30/20 budget, for example, involves spending 50% of your income on necessary expenses, 30% on discretionary expenses, and 20% on savings. Another approach is zero-based budgeting, which basically means allocating every dollar you make to a certain purpose until your balance is zero.

That doesn’t mean you spend everything you make — some of those “expenses” might be saving in your emergency fund or retirement account. But in the end, your income minus “expenses” is zero and every dollar is accounted for.

Check in with your budget regularly to make sure you’re staying on top of your goals. By putting in the time, you can get control over your money and make sure you succeed as a freelancer, instead of feeling like you’re struggling and have to return to a regular job.

6. Figure out your “deal-breaker” rates

Do you have a clear sense of what your services are worth? Do some research on freelancer rates for people with your skills and experience level. You don’t want to waste your valuable time with underpaying clients, and you’ll feel burnt out if you take whatever you can get.

If you’re starting from zero, you might have to charge low rates to build your portfolio until you can start charging more. But if you’ve got some experience, make sure you’re being paid fairly, and be prepared to walk away if a client can’t meet your “deal-breaker” rates.

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7. Set clear payment deadlines for your clients

One bane of a freelancer’s existence is when a client disappears without paying them for their work. Try to prevent this occurrence by stating clear payment deadlines and conditions on your invoices and contracts.

Get everything down in writing to make sure you and the client are on the same page. And don’t be afraid to send a reminder if the deadline is approaching or has just passed and you haven’t gotten compensated for your work.

8. Set up an independent retirement account (IRA)

When you’re an employee, your employer might have a 401(k) set up for your retirement savings needs. But as a freelancer, you’re responsible for building your nest egg.

Look into IRAs with a company like Vanguard or Betterment. If you can afford it, automatically set aside some money into your account each month.

Although saving for retirement isn’t the most fun thing, “Future You” will appreciate your efforts. Just remember, the earlier you start saving, the larger your retirement savings will grow as a result of compound interest.

9. Find a health insurance plan that meets your needs

Health insurance is another benefit you’ll need to purchase on your own as a freelancer. Unfortunately, finding affordable health insurance without an employer’s help in the U.S. is no easy feat.

But don’t let this be a dealbreaker, as lots of freelancers provide this benefit for themselves in exchange for not having to work for a boss. If you’re in the U.S., head to to find your state’s health insurance marketplace.

You might also be able to talk to an insurance broker who can connect you with a plan or buy an individual plan directly from a health insurance company. The ins and outs of health insurance can be baffling, but once you’ve found your plan, hopefully you won’t have to deal with it anymore (apart from the monthly bill).

Financial planning for freelancers doesn’t have to be stressful

If you’re drawn to freelancing, chances are you have a strong streak of independence. So even though these financial demands can be challenging, you’re well equipped to handle them.

Take some time to design a budget, make a savings plan, and sign up for your own benefits. If you run into any roadblocks, try reaching out to other freelancers for their advice.

As long as you’re proactive about managing your money, you can find success as a freelancer and enjoy the freedom and perks that go with this career path.