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I’m A Freelancer, & I’m Really Bad At Saving. Here’s How I Manage My Money

Welcome to Taking Stock, a space where we can take a deep breath and try to figure out what the COVID-19 economy really means for our finances. Every month, personal finance expert Paco de Leon will answer your most difficult, emotionally charged questions about money. This last two years have forced many of us to reprioritize our finances, and there’s no clear road map for getting through the pandemic yet — but Taking Stock is here to help us figure it out together.
Last time, we spoke with a reader about what it's like to feel financially secure as a self-employed freelancer with sporadic paychecks. This week, we heard from Refinery29 readers about their own experiences  (both good and bad) managing their income as a freelancer.
Megan, 28 — Massachusetts
Megan has been working as a freelance book publicist for around four months now. "I decided to go freelance after working at a very expensive book publicity agency. I realized that the only people who could afford to hire a publicist are those that are independently wealthy, like CEOs, or have an organization behind them, which creates a barrier for most authors," she tells Refinery29. "The ones I especially like to work with — academics, journalists, artists, etc. — don't have the resources to hire expensive PR and marketing firms, so I charge less."
Even though Megan's services are less expensive, she says she's actually making more as a freelancer than she was at an agency. "I didn't leave my salaried job until I had a very comfortable cushion under me in a savings account, which meant that for around six months, I was basically working two full-time jobs: my salaried job at the agency and my side hustle that I eventually turned main hustle."
This year, Megan's freelance income is close to $130,000. "Right now, the biggest must-do for me is paying my taxes quarterly," she says. "I have started an engagement with a financial planner, though, as it's harder for me to visualize long-term planning now that I'm freelance." She says that the most difficult thing about managing her income as a freelancer is organizing her savings for retirement and splitting expenses with her spouse. "We had a tried-and-true system for many years that has proved incapable of adapting to my freelance pay, so we're working it out," she says.
"I'm only 28, so I have lots of life ahead of me," she says. "That said, these past four months have been the happiest, least stressful of my life since graduating college and starting to work full-time eight years ago, so I can't imagine going back to an office environment where I didn't have the freedom and flexibility I have now."
Haley, 27 — Pennsylvania
Haley couldn't find a full-time position after graduating college, so she turned to freelancing and has been doing it ever since — mainly because of the freedom and flexibility it gives her. "My business is classified as an S-Corp so I pay myself a regular salary that comes to about $1,100 every two weeks after taxes," she says. "This is a figure I've worked with my accountant to calculate so that everything is above board come tax time. I take distributions on a quarterly basis based on business profit for that period, and those can range from $500 to $2,000, depending on what business has been like that quarter."
"I work with an accountant to make sure that I'm categorizing everything correctly and my taxes are squared away each quarter, but I'm also super involved in my bookkeeping," Haley says. "I meet with another friend who owns their own business each Monday for a money date where we categorize our transactions, project future months, and make sure we're on track with our spending and sales goals."
Haley has emergency funds for both their personal and business accounts, and typically works with clients on a per-project basis where the pay can range from $800-$4,500. "This year I should do $75-$80,000 in revenue and I'll take home about half of that after taxes and other business expenses," they say. "I'm really fortunate to share most of my expenses with my partner, so even though my take home pay is lower than I'd like, I'm able to cover the necessities and have a little bit of wiggle room for fun stuff."
"I've always been really proud to support myself from my freelancing business, and have never faced a situation where I needed to borrow money from my parents to make rent or have friends help me out, but I also recognize that I'm very privileged to have graduated college without debt and with a substantial savings account," Haley says. "I also think that, even though I've never had to ask them to, knowing that my family would help me out if I needed it is a really big safety blanket that not everybody has."
"I think knowing that if I were to get a 'normal' job, I could easily be making double or triple what I make right now hurts sometimes," Haley says. "I'm super happy with my life but I'm not above admitting that I can get jealous when I see peers with nicer clothes or going on fancy vacations that I can't afford. I really value my freedom though and at the end of the day, if I want to take a random day off or stop working at noon, I can and I don't have to answer to anyone about it — and that's more valuable to me than a vacation."
Julia, 33 – Canada
Julia has worked as a designer in the theater industry for seven years, and says that freelancing is just the way that the industry works. "My yearly pay ranges from $35,000 to $50,000," she says. "We get paid out in three payments: when we sign the contract, completion of the design or the first day of rehearsal, and on opening night. The paycheck really depends on the size of the production, but the average is about $1,750."
When it comes to saving, Julia has a system down. "I put 5% of the paycheck into my rewards account for any entertainment or shopping, and I usually save about 10-15% of the paycheck for the future," she says. "In any rare months where I get all the checks in at the same time, I save all of the leftover after paying all the bills because I may not get any paychecks for the next few weeks."
One of the most frustrating parts of the freelance life for Julia is not getting paid on time. "I have asked my brother to borrow $1,000 to pay for my credit card to avoid any interest fee. My client was late on paying me," she says. "I knew the amount of money coming in, but didn't know exactly when. It was extremely frustrating. And from this experience, I started to let the client know that I will be charging interest for any overdue payments."
Dayana, 29 — Costa Rica
Dayana has been freelancing since 2017. "I kept getting fired from office jobs because I was always late and hated being stuffed in a cubicle with limited days off," she says. "I got fired from my last office job in 2017 and moved to a tree house in the Dominican Republic. I lived there for free and very cheaply while looking for work online." She found a company that paid her a retainer for writing resumes online, then got another retainer writing for a travel magazine, and ultimately, picked up copywriting in 2020. Dayana was able to scale her freelance business to six figures in 13 months.
She usually works on retainers, or long-term agreements. "One of them has been a retainer for five years now which is my most regular source of income," she says. "I always try to negotiate a retainer whenever possible versus one-off projects. And if I do work on one-off projects, I charge more."
"When I get paid, a quarter of my finances automatically goes into investments — I invest in stocks and crypto," Dayana says. "Another quarter goes into my saving account, the third quarter goes to rent and living expenses, and the fourth quarter goes into investing in myself, which means coaching and mentorship programs, new tech (such as a laptop or a camera for my course creation), business trips, and software I use to host my website, courses, and my upcoming podcast."
"When you work as a freelancer, your energy and your motivation can be a rollercoaster, and rightfully so. Clients ghost you, cut your hours, and you feel helpless," they say. "I have learned to be a stone-cold pro at managing my energy around it and I'm no longer shy to charge what I deserve. It can be tricky chasing up payments so I always ask either for a contract if they want to pay at the end of the month, or to pay upfront."
"I love the freedom," Dayana says, "I will never, ever go back to being someone's employee and having to live by someone else's rules."
Megan, 26 — Illinois
Megan graduated with her master's in music in 2020, right in the middle of the pandemic. There were no orchestra jobs to be found because of COVID-19, so she pivoted. "I'd always been interested in social media and food, so I decided to take a food photography course that fall. I landed a social media internship with a food company, and then got a full-time job as a social media coordinator for a beverage startup in March 2021," she says.
She decided to go full-time freelance in January 2022 because she could no longer balance client work with her job. "I wasn't giving my all to either job, so I decided to go all in with my own business," she says. "I love being able to work for myself, the flexibility, working towards my own goals (not an employer's!), and doing what I love."
"Last year I made about $35,000, but I'm on track to make about $60,000 this year," Megan says. "I get paid a few times a month from clients, usually 30 days after I submit an invoice, and my average check is $2,000."
For Megan, organizing her savings is one of the most difficult parts of being a freelancer. "To be honest, I'm really bad at saving. I recently moved from Milwaukee, WI to Chicago, so my cost of living has increased a lot," she says. "I'm trying to be better about it by setting aside a specific percentage of each check for saving."
Another hardship is, of course, taxes. "Sometimes it's hard to remember that your bank account is 'bloated' with tax money. It can be hard to know what is and isn't a business expense, so I recommend getting an accountant," she says. "Besides inconsistency, the other hardest thing is loneliness. I work alone a lot and don't have other coworkers to mingle with. Sometimes I feel really alone, especially being in a new city. I'm lucky to have a group of other food photographers to talk to. We have Zoom calls every other week to catch up and talk about our struggles and goals!"
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