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You've done it! You're now captain of your own career and running your own business. But with money coming in at irregular intervals, how do you effectively budget as a freelancer?

From being in charge of your own taxes and insurance, paying the bills each month, and keeping up with your savings goals, there's no shortage of moving parts to create a budget as a freelancer. However, with a few tips, you can shift your money mindset and make the freelance lifestyle one that pays you back year after year.

1. Create an Emergency Fund

Freelance income has its ebbs and flows, but your monthly obligations like living and healthcare expenses are constant. To help your freelance business thrive through the low cash flow months, set up an emergency fund. While you might have to start small, a good figure to establish as a baseline for savings is the total of your monthly living expenses.

While you may have to tap into these funds from time to time, make a solid effort to keep this account no lower than your baseline. You can also set up automatic transfers from your checking to your emergency fund — even as little as $25 per week — to help build that cushion to protect you during lean times. Ultimately, a target goal of three months of living expenses can give you much-needed relief during the slowest periods of cash flow and help you absorb events like the loss of a client or time off work for unexpected personal and medical needs.

2. Establish Your Budget

When building a budget as a freelancer, there are more considerations than just your monthly living expenses to keep in mind. While what you make each month might change, your monthly expenses should remain fairly static.

Here's a solid list to help you begin your monthly budget:

  • Living expenses
  • Taxes (federal, state, unemployment, and social security)
  • Business expenses (web hosting, subscriptions, billing tools, conference lines, and software)
  • Travel (gas, car maintenance, airfare, and hotels)

When you've tallied this list, add 15 percent on top of the total. This is your target gross income for each month. The extra 15 percent will give you breathing room and help so that you don't come up short when the bills are due.

As for taxes, the generally accepted guideline is to reserve 40 percent of your income each quarter. As you progress through the freelance life, you'll get a better feel with each passing year for what you need to stash aside based on the payments owed or refunds you received when you filed taxes for the year.

3. Learn the Power of "No"

Working as a freelancer puts you at the helm of your time and income potential. This means that the word "no" becomes a powerful part of your vocabulary. A key aspect of your budget is time and what you are paid for the time you spend.

While early years of a freelance career might be filled with gratitude for anyone who wants to send business your way, you'll soon learn where you want to spend your time and where it's most valuable. Evaluate each project as an opportunity. Consider each client on a case-by-case basis, as though you're hiring them as much as they're hiring you. And don't be afraid to say no to work that no longer excites you or has proven in the past to be a drain on resources without much financial reward.

With these three powerful tips, you can charge ahead in your freelance career with financial savvy and stay afloat even when cash flow is lower than you'd like.


This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

By selecting any external link on, you will leave the KeyBank website and jump to an unaffiliated third party website that may offer a different privacy policy and level of security. The third party is responsible for website content and system availability. KeyBank does not offer, endorse, recommend, or guarantee any product or service available on that entity's website.

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