Valuable Financial Advice for Freelancers


Freelancing has been on the rise in the past 5 years with 2019 recording 57 million freelancers. The numbers are only expected to continue their incline in light of the 2019 pandemic and the demand for remote work. With $1.2 trillion of the U.S economy in 2020 attributed to freelancers, there is a growing need to educate them on how to secure themselves financially.

Charge your Client’s Opportunity Cost NOT Yours

“One pricing tip for freelancers is that you shouldn’t charge your opportunity cost, you should charge your client’s opportunity cost. A common mistake that new freelancers make is to assume that because they can charge a high rate for one type of work, that all of their work should be done at that rate. For example, maybe you are a skilled graphic designer and charge $250 per hour to design logos. If a client asks you to do lower value work, like some Instagram images or maybe graphics for a blog post, you probably can’t charge your logo rate. You may think, “well my time is worth $250 per hour so every client should pay that”, but it doesn’t work at scale. You can charge the same rate as an equally qualified competitor for that specific task, plus a small buffer for your client not having to go out and find that competitor.”

Michael Alexis, CEO of Team Building

Get Some Long-Term Clients

To get establish some stability in your income, Freelance and Finance Writer Jabran Kundi advises, “One of the things I like about freelancing is getting to work on new exciting projects. These help avoid burnout and ensure one’s life isn’t stuck in a routine like most 9-5 jobs are. However, long-term gigs are crucial too, and for a very good reason. They bring the financial stability that a freelancer needs. Many freelancers complain that when a client stops providing work, they can’t fill their schedule with other clients immediately. That ultimately affects their bottom line. If you have a couple of long-term clients, they will ensure you have a steady stream of income. I always keep a few long-term clients on my side, even if they pay lower than what I usually like to be paid. I do not want to miss out on money while I’m looking to replace my short-term clients.”

Create a Realistic Personal Budget

“Freelancers have irregular financial gain. you will try to keep up a gradual stream of earnings, however typically once and the way abundant you get paid is simply out of your management. As a result, bound months are also flush with money, whereas others manufacture solely a trickle. In addition to making a business budget, you must even have a sensible personal budget you’ll keep on with. These 2 budgets can facilitate make sure you perpetually have enough to measure on and meet money obligations, even in your throw months. When making your personal budget, it’s essential to base it on a conservative monthly financial gain quantity. Don’t use your best month’s financial gain and hope to attain that every month going forward. Doing,

therefore, can leave you with very little flexibility once things don’t go as planned. If you’ve got freelanced for a minimum of a year, you’ll divide your previous year’s annual financial gain by twelve to work out your average monthly financial gain. check that to take into account expenses you will not have every month, like your quarterly account.”

Daniel Carter, SEO manager at Property Investments

Create a Separate Bank Account

“While it might sound counter-intuitive, all freelancers should have a separate business bank (and credit card) account. With only business activity taking place in these accounts, you will be less likely to make a mistake when it comes time to do your taxes (missing a business transaction

listed among personal ones). The other thing all freelancers need to do is to be aware of the self-employment tax”

Eric J. Nisall, Freelance Tax Expert


Something all freelancers need to be mindful of is “tax”. According to Financial Advisor Pavlo Huda, “Your income taxes are not deducted from your paycheck and you will have to pay what you owe by April 15th of each year. It is advised to estimate your approximate annual income at the beginning of each year to know your approximate tax bracket and what amount you would likely owe in income tax. Additionally, every freelancer should put away 10-20% of every paycheck specifically to cover income taxes. That way, you will save enough throughout the year and will avoid any troubles with the IRS.”


 “One of the most often overlooked areas of financial planning for freelancers revolves around proper insurance coverage for home office equipment, as well as liability coverage. Most homeowners insurance will not cover business property if damaged, lost, or stolen. Furthermore, any work being done on-site, if it results in some type of liability or injury, will not be covered generally by standard homeowners insurance policies. It is critical that freelancers and other remote work personnel contact their insurance agent for proper advice and coverage options.”

Stacey A. Giulianti, Esq. Chief Legal Officer, Florida Peninsula Insurance Co

Disability Protection

“Be sure you have property disability income protection. Your ability to earn an income is your greatest asset and you don’ have the added benefit of group coverage through an employer. If you had a machine at your house that spit out money weekly you would likely insure it in case it stops working, right? Think of your body as that money machine and properly protect it.”

Nick Davidson, Financial Advisor, Foster Klima & Company, Inc

You need to have a Retirement Savings Account

“This is crucial because working as a freelancer you are not having an opportunity to save through 401(k) or other employer-sponsored plans, which focused on building your retirement savings. As a result, you have to take care of it yourself, if you don’t want to end up empty-handed when retired. By starting and contributing to IRA or Roth IRA savings account freelancer should be able to build necessary savings for your retirement. It is important to remember that the sooner you start the more you will be able to save through compounding and tax-saving opportunities that such retirement plans offer.

Often, these two things get overlooked by freelancers and cause plenty of problems down the road.”

Pavlo Huda, Financial Advisor, CFA Candidate. PG Capital Management Group

Emergency Fund

“One of the most valuable financial tips for freelancers is to keep a very solid Emergency Fund in an interest-bearing cash account (like a savings or FDIC money market account). The “feast or famine” nature of freelancing means that some months will be super profitable and others lean. Leveraging the good months to help with the slow ones reduces a lot of the stress of freelancing.

A good rule of thumb for the size of an Emergency Fund for freelancers and self-employed is 6+ months’ worth of expenses. This will allow for managing several consecutive months of missed income without taking on excessive debt or pulling money from long-term investment accounts like IRAs. While the minimum amount I recommend to freelancers is 6 months’ worth of expenses, some may find the added security of 12 months’ worth – a full year of expenses – helps them sleep at night.

“A quick and dirty way to estimate the target size is to add up all the money spent over the last 6 months from checking, credit card, or other accounts. Gather or download all bank and credit card statements from the last six months and look at the amount at the top of the statement marked withdrawals, debits, charges, etc. Adding up those numbers provides an extremely realistic picture of what you would need to cover expenses for the next six months, since it is what was actually spent over a six-month period. The amount needed for just essential expenses (the “must-haves”, not the “nice to haves”) will be a bit lower than that, but sometimes the simplest approach works best.”

Timothy Iseler, Founder of Iseler Financial, LLC

Keep Increasing your Rates to Earn Respect

“One thing I have learned in 11 years of freelancing is that clients often judge you by your hourly rate. I have worked for clients on minimum wage as well as a wage I never thought I deserved. It is never about what you think you deserve! I’ve had clients tell me my work is average when I was working on a low pay. I’ve had clients rate exactly the same work as excellent when my rate went up three-folds. This sounds counter-intuitive, but if you want your work to be respected, charge more.”

Jabran Kundi, freelance and financial writer at The Stock Dork

Diversifying Your Income

“Diversifying your income is one of the most important things you need to learn as a freelancer. Freelancers should always consider working on new projects, a side business, or freelancing for other companies that might pay better. Another tip is to never stop learning and to continue updating your skillset so you can always be prepared to take on new challenges. This will also allow you to demand higher rates as employers will know you have the skills they need.

Instead of spending all your time in one place, it’s important that freelancers diversify their freelance sources and work as many gigs as possible so they have a regular flow of income coming in from different sources. It can provide some stability for freelance workers who may be at risk of being let go from one of their jobs. Furthermore, you should always separate your finances from freelancing. You need to have a separate bank account and stop using the money you make from your freelance job for non-working expenses. Freelancing is a business like any other. So you should be mindful of how your money is spent. It’s important to create a budget for your freelance business and stick with it. You should also make sure to stick with the

quotes you give clients and ensure that you don’t spend too much on your business. 

As a freelancer, you should always have a backup plan in case one of your gigs doesn’t pay well or needs to be terminated early. Always make sure to keep other sources of income aside in case your main source dries up. This will help you avoid having any financial problems as well as being able to help out other people if they need it.”

Peter Keszegh, founder of digital marketing website and blog; OnlinebizBooster


With freelancing gaining popularity, freelancers need to understand how to protect themselves financially. Freelancing doesn’t have to mean instability anymore. By following these pieces of advice from professionals and experts, such as a Virtual Assistant for Financial Advisors, you can reap the benefits of freelancing while also fortifying yourself financially.


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