Freelancer Financials—Tame Your Cash Flow

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Alison Page

Alison has worked full-time in the writing industry for over ten years, using her knowledge and life experience to create online content, fiction and non-fiction. Alison has published two novels and has ghost-written several non-fiction equestrian books for a client. Alison has been a full-time professional content writer for almost ten years and loves her work as a wordsmith.

Freelancer financials refers to the financial management and planning you must undertake when working as a freelancer. That includes managing your cash flow, budget, taxes, rates, and retirement savings.

Working as a freelance writer comes with a set of unique financial challenges. My biggest challenge is managing an irregular income since I never know exactly how much I’ll earn monthly. That makes it tricky to budget and save for my retirement. 

Unlike in-house workers, freelancers are responsible for paying their taxes and tracking expenditures. In addition, working freelance means you won’t receive traditional company benefits such as health insurance and retirement plans, which means you must plan and save for these expenses yourself.

These challenges highlight the importance of proactive financial management for freelance writers.

In this guide, I provide helpful information and tips on budgeting basics, setting payment rates, and negotiating invoice settlement. I also discuss tax planning for freelancers and saving and investing, including retirement savings options. Finally, I give you a handy list of financial tools and resources to help you manage your invoicing and accounting processes and records.

If you’re about to embark on a career as a freelancer, you must read this article and learn how to take control of your financial future!

Freelancer Financials—Tame Your Cash Flow

What Are Budgeting Basics for Freelancers?

Managing your finances is easier if you have a detailed budget to track your monthly income and expenses. Knowing how much money you have available to spend and save is essential for your home and business expenses, and your accountant will need detailed records to compile your tax return.

What Are Some Tips for Tracking Your Income and Expenditure?

Remember to backup your files to an external hard disk or save your work securely in the cloud. The last thing you want is to lose all your financial records because of a computer meltdown!

Income Tracking

  • Set up a spreadsheet with multiple pages. Use a page for each of your freelance income streams, such as article writing, copywriting, editing, and other relevant writing services you provide. 
  • Record the date and amount of each payment received, the client who paid you, and the job for which you received payment.
  • Note any deductions such as taxes, fees, and commissions deducted from each payment.

Expenditure Tracking

  • Create a spreadsheet with multiple pages for categories like office supplies, internet and phone bills, travel expenses, advertising costs, software subscriptions, and anything else you spend on running your business.
  • Keep all your receipts and invoices organized and in one place, either physically or digitally. That’s important for accounting purposes because you’ll need them when your tax return is due.
  • Unless you’re experienced in accounting, hiring an accountant or tax professional is recommended to ensure you’re categorizing correctly and taking advantage of all applicable deductions. That’s especially important for freelancers working from home since you can claim against tax for the running costs of a home office.
  • Review your income and expenses regularly to identify areas where you could potentially cut costs or boost your income.

What Tools and Templates Can You Use to Track Income and Expenditure?

The maxim “time is money” is certainly the case when it comes to working as a freelance writer. So, you don’t want to spend too much time poring over spreadsheets and working out budgets. Here are some handy tools and templates that can lighten the load.

Microsoft Excel or Google Sheets


These are versatile spreadsheet tools I use daily to record details of my income, expenses, and workload. You can customize the spreadsheets to suit your needs; they are very user-friendly.


Mint is a popular budgeting app that automatically categorizes transactions, tracks spending, and provides useful insights into your financial habits.

YNAB (You Need A Budget)


YNAB is a budgeting app based on the zero-based budgeting method. The app helps you allocate every dollar you earn to specific budget categories.



Quicken is a comprehensive financial management tool for individuals and small businesses. It offers budgeting, bill tracking, investment management, and more. 



Tiller is a service that automatically imports your financial transactions into a Google Sheet or Microsoft Excel spreadsheet, making it easy to track your income and expenses in a user-friendly, familiar environment.

How to Set Rates and Negotiate Payment

Setting rates and negotiating payment for their services is one aspect of freelancing that many people find extremely challenging. So, I’m going to guide you on how to determine fair rates for your work and negotiate timely payments from your clients.

How to Determine Fair Rates

Knowing how to determine fair rates for your services is critical to your success as a freelance writer. Here are some top tips on ensuring you get paid what you’re truly worth.

Consider Your Experience

Your previous experience plays a significant role in determining your rates as a freelancer. 

At the beginning of your career, while you’re building your portfolio, you might have to charge lower rates to attract clients. However, as you gain more experience, especially if you specialize in a particular field, you can gradually increase your charges.

Research Industry Standards

Research current industry rates and compare them to what other freelance writers with similar experience are charging. You can find that information on freelance platforms where rates are disclosed or by simply asking other freelancers. 

Consider Your Specialism

If you specialize in a particular industry or niche, such as medical or technical writing, you can generally charge higher rates than general content writing. 

Evaluate Project Scope

When setting your rates, consider the project scope, including research, revisions, interviews, and any additional services you provide.

Calculate Desired Income

Work out how much you need to earn to cover your expenses, taxes, and desired annual income. 

Remember to take into account factors such as your cost of living, business expenses, such as software subscriptions or marketing costs, and the number of billable hours you can realistically work in a week or month. Don’t forget to include income taxes, health insurance, etc. in your calculation.

Negotiate Confidently

When negotiating with your clients, explain clearly why your rates are justified based on your experience, expertise, and the project scope. Don’t fall into the trap of undervaluing your work! That said, be flexible and prepared to compromise when necessary. 

Negotiation Strategies

Once you’ve decided on the rates you’ll charge your clients, you must know how to negotiate effectively for work and secure prompt payment of your invoices.

  • State your rates, payment terms, and any additional fees in your initial client contract or agreement to prevent misunderstandings later.
  • Create a slick, professional portfolio that highlights your experience, skills, and expertise and justifies the rates you charge.
  • Professional communication is key when negotiating with clients, especially when chasing payment of invoices. Reply to emails and messages promptly, and be ready to address any concerns or queries the client has.
  • Be sure to put across the value you bring to the client’s project. That could be your writing style, ability to meet deadlines, or specialist expertise in a particular niche. 
  • Negotiate payment terms that work for both you and your client, but ensure you’re protected against non-payment or late payments.
  • In your contract, specify penalties for late payments to encourage clients to pay on time.
  • If a payment is late, be prepared to send polite but firm reminders. Sometimes, delays can happen due to administrative issues or technical hitches, so give your client the benefit of the doubt initially. However, be prepared to up the ante and pursue the payment more actively if necessary.
  • It can be depressing to work hard to complete a project only to find that the client doesn’t pay. I once worked on a long project for a new client who promised more work once the job was completed. Unfortunately, it took three months and many emails and messages before my invoice was eventually settled in full.

    In cases where the client consistently fails to pay on time, consider ending the relationship. Your time and expertise are valuable, and working with clients who respect that is essential.

Contracts and Payment Terms

As a freelancer, it’s essential to have clear contracts and payment terms since they ensure both you and your client understand the scope of the work, turnaround times, and payment expectations.

You should agree on payment terms before the project starts, and the contract should outline the payment amount, due date, and payment method. 

If you don’t have clear contracts and payment terms with your clients, you risk misunderstandings and disputes. Both provide a legal framework for the project and ensure that both parties know their rights and responsibilities. In the worst-case scenario, if a dispute does arise, you can use the contract as evidence in court to resolve the issue. 

How to Plan for Taxes

Although no one likes paying the taxman, that’s life when you’re a self-employed freelancer!

Estimated taxes are quarterly tax payments you make to the IRS throughout the year based on your projected income. They are due every April 15th, June 15th, September 15th, and January 15th of the following year.

You can calculate your estimated taxes by estimating your income and deductible expenses for the year, using IRS Form 1040-ES to help you. Once you have your estimated tax liability, you can make payments online or by mail using IRS Form 1040-ES. You must make these payments on time to avoid penalties and interest charges.

Although it may be painful at the time, by making estimated tax payments, you can avoid owing a large sum of money at tax time and minimize the risk of penalties. So, plan ahead and remember to include projected tax payments in your budget.

Common Tax Deductions

Fortunately, there are plenty of common tax deductions that apply to freelance writers, including the following:

  • Home office
  • Broadband/internet charges
  • Equipment, such as computers, laptops, printers, and the like
  • Subscriptions, such as Grammarly and Copyscape
  • Cell phone
  • Travel expenses, if applicable

Be sure to include all these deductions when calculating your tax return for the year.

Should You Use a Tax Professional?

I strongly recommend consulting with a tax professional if you’re working as a freelancer. 

These pros can provide guidance and advice on properly filing your taxes and ensure that you are taking advantage of all available deductions and credits. In addition, a tax professional will help you stay on top of important deadlines, such as when estimated tax payments are due, and can offer advice on how to structure your business to minimize your tax liability. 

For me, working with a tax professional gives me peace of mind. Instead of worrying about whether I have properly accounted for all of my income and deductions, I’m confident that my accountant is handling my taxes for me. That frees up my time and energy to devote to growing my business.

How Can Freelancers Save and Invest?

Freelancer Financials—Tame Your Cash Flow 1

As mentioned earlier, freelancing is often a case of feast or famine, with workflow sometimes proving sporadic. For that reason, it’s important to put aside some funds for emergencies when work is in short supply.

Retirement Savings Options

Two popular retirement savings options tailored for self-employed individuals in the US are the SEP IRA and Solo 401(k). 

SEP IRA (Simplified Employee Pension)

This kind of IRA allows self-employed freelancers to contribute up to $66,000 for the 2023 tax year or $69,000 for the 2024 tax year, whichever is less. Contributions are generally limited to 20% of net income.

Your contributions are tax-deductible, which means they can reduce your taxable income for that year. In addition, a SEP IRA is easy to set up and maintain, and you have no annual filing requirements to worry about.

Solo 401(k)

This retirement savings plan is designed for self-employed or small business owners with no employees except for their spouses. 

There’s a total Solo 401(k) contribution limit of up to $69,000 in 2024 and a catch-up contribution of an extra $7,500 for those over 50. Contributions to a Solo 401(k) are tax-deductible, and the earnings grow tax-deferred until you withdraw them when you retire. 

Both these plans give self-employed freelancers a tax-advantaged way to save for retirement and can be a great way to build wealth over time. I recommend consulting a financial advisor or tax professional before choosing a retirement savings plan to be sure you pick the best option for you.

Investing as a Freelancer

If you get it right, investing can be a highly efficient way to grow your wealth and secure your financial future.

  • Start small, and don’t invest more than you can afford to lose.
  • Diversify your investments across various asset classes, like stocks, bonds, and real estate, to reduce your risk and boost the potential for long-term returns.
  • Consider investing in low-cost index funds that track the broader market’s performance without needing to pick individual stocks.
  • Use financial news websites and apps, financial advisors, or investment groups to keep up to date with the latest news and trends in the market so that you can make informed investment decisions. 

Investing demands taking risks, and there are no guarantees of making good returns. So, be sure to do plenty of research and seek professional advice before you make any investment decisions.


Working as a self-employed freelancer can mean adapting to fluctuating income and expenditure, depending on your circumstances and the work available. Financial stability is essential for a sustainable freelance writing career, so you must take charge of your finances and seek professional help if necessary. 

Set your rates carefully, considering your outgoings, and remember to put aside some money for your annual tax bill. Learn to negotiate rates effectively with your clients and put in place a system to ensure you get paid in full and promptly. Use spreadsheets or suitable software to keep track of your outgoings and expenditures.

You should plan for your retirement and consider taking out a savings plan or learning to make modest investments that will grow over time. In these uncertain times, it is strongly recommended that you discuss your financial matters with an accountant or tax professional before making any decisions.