Jenny Knizner Published 8:33 a.m. ET April 23, 2018 | Updated 10:45 a.m. ET April 23, 2018

While there are many benefits to being your own boss, including the flexibility of how and when you work, this freedom doesn’t come without a price: missing out on employer benefits and having to deal with an unpredictable income.

If you’re not carefully tracking the flow of your money, you could be on a swift road back to the 9–5 grind. Ensure your finances are as first-rate as your work with the help of these top freelancer finance tips.

Track your income

Once you get money coming in from several clients, things can get a little chaotic. Getting a handle on your money starts with having a clear picture of how much you’re bringing in. Do you know how much you earned last week or last month? Was it more or less than what you earned in that same period last year?

“A lot of freelancers say they have no idea how much they make, and they throw their hands up in the air because they feel it’s so unpredictable and unmanageable,” said certified financial planner,  Kristen Euretig. “In reality, they have more predictable income streams than they realize.”

Having a historical view of your freelance income can help prepare you for busy and slow times during the year, she says, especially if you have repeat clients or seasonal projects. Those types of insights can bring some financial stability to the irregular freelancing world. A simple spreadsheet or tracking app like  QuickBooks Self-Employed can help you keep tabs on your income and expenses so you always have an accurate view of your finances.

Create a budget

Budgeting may seem daunting, but it doesn’t have to be. If you have no idea where to start, Nerdwallet recommends loosely allocating 50% of your after-tax income for necessities, 30% for stuff you want but don’t need, and 20% for savings and paying down debt.

The key to making this work is focusing on the savings and debt repayment part of the plan. Here’s the best way to handle that cash:

  • Stash $500 for small, short-term emergencies
  • Build an emergency fund that covers three to six months of expenses, such as housing, bills, and debt payments
  • Pay off debt that carries high or variable interest rates, including credit card debt, payday loans, and medical debt, prioritizing by the interest rate to save the most money
  • Set aside at least 20% of each paycheck for quarterly estimated taxes and then set aside a little extra for any tax time miscalculations or unexpected expenses
  • Start saving for retirement by choosing a plan like an individual retirement account or Solo 401(k), and try to contribute 10–15% of your after-tax earnings
  • Get insured and save yourself financial distress if you have a medical condition or an unexpected health emergency

Pro tip: Most people organize their finances around the days they get paid and the days their bills are due. If your due dates aren’t convenient, many bill providers will allow you to change them.

Separate your business and personal finances

Most experts and seasoned freelancers recommend keeping separate business and personal accounts. If you’re just starting out, you might be tempted to keep your finances combined. As your freelance business grows, you’ll likely need to hire subcontractors to help you manage your business or take on extra client work. You’ll also likely need to start investing more into supporting materials for your business like software, apps, equipment, marketing.

In other words, business gets complicated (quickly). Start out with organized finances and make tracking freelance-related money easier by setting up separate business and personal accounts. A simple guide could be:

  • Business checking: Your main account for client payments and business expenses
  • Business savings: Your savings for taxes and business emergencies
  • Personal checking: Your non-business-related expenses, such as mortgage, utilities, restaurants, retirement, and insurance payments
  • Personal savings: Your emergency fund

If you’re ready to open a new business account, Bank of America® is offering an up to $350 Bonus* for new small business checking and credit card customers. Learn more.

Set competitive rates

Periodically evaluate the rates of your services and make adjustments if you find that you’re not being adequately compensated. Don’t be afraid to increase your rates if you’ve added new skills to your toolset, if find that you are getting too many lower quality jobs, or if your rates are not competitive with your peers.

Earning more money can alleviate financial pressure, providing more wiggle room in your budget. Start by reaching out to other freelance professionals to get a feel for average rates in your industry. You can also use the Bureau of Labor Statistics or a site like Glassdoor to find out the average annual salary for someone with your skills and experience. Then break that figure down to find the hourly rate.

Don’t be afraid to find additional work

Part of the attraction to freelancing is the freedom it gives you to make your own schedule and be your own boss. That said, sometimes finding another job on the side can provide an infusion of cash as well as valuable experience that boosts the effectiveness of your freelancing work.

An excellent way to supplement your income is to pick up side work that is complementary to your freelance business on Moonlighting. Moonlighting is the fastest growing on-demand hiring community. You can market your freelance services to employers ready to hire accountants, graphic designers, tutors, landscapers, pet sitters, and anything in between.

So for example, if you’re a financial planner, picking up a tax job on the side is worth considering. Not only will working in a complementary position help improve your finances, but it will contribute to your personal and professional growth as an expert in your industry. Additionally, it never hurts to pad the resume when you’re trying to sell your freelance services to new clients.

For freelancers, properly managing your money really comes down to knowing your cash flow, managing your expenses, planning ahead, and developing alternative revenue streams. If you’re able to stay flexible, then you should have no trouble making it through the leaner times.

Are you ready to start your own business or try out a few side gigs to get the feel of freelancing? No matter what path you choose, kick start your freelance career by joining the amazing community of freelancers, entrepreneurs, and gig workers on Moonlighting. Sign up or download the app today – Free!

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