Smart Money Management Tips for Freelance Designers

Smart Money Management Tips for Freelance Designers

Being a freelancer means having to be completely responsible for our finances, and that includes financing our personal lives, business, and work benefits. It’s definitely not easy. There are quite a few tips around for personal finance, but there really isn’t a lot of practical advice for the self-employed.

Smart Money Management Tips for Freelance Designers
Image credit: Alan Cleaver

Being a creative designer, logic and finances aren’t always the most appealing things to keep track of. In some instances, some designers may feel that they lack in the area of finance and organization solely because of their natural creative and free instincts. Don’t worry, though, anyone as they are now – creative, unorganized, organized neat-freak, simple minded, genius, or otherwise – can tackle a freelance budget and freelance personal finances with just a few new habits and smart tips supporting them.

Know Exactly What You’re Making

Do you really know what you’re making…really? It can be easy to plan ahead and say to yourself: “I had this project this month worth $600, and another finished up at the beginning of the month for $2500. That’ll cover my bills!” Or, perhaps, you plan your finances ahead, knowing how much work you’ll get done and how much money that will result in at the end of the month. Either way, you realize by the end of the month you didn’t make enough, didn’t save enough, or just reached nowhere towards your financial target.

Smart Money Management Tips for Freelance Designers
Image credit: mtsofan

It happens to the best of us. Take a look at your bank account history, right now just in the income field. Are you really making as much as you thought? Did the payments you thought would come in actually come in? Were they short? Are you making less because of finance charges, and transaction fees?

Many freelancers often overestimate what they actually make. Determine how much you’ve made each month, down to the penny, and average the amount. By doing this, you can get a far more accurate picture of where you are, and where you need to be. You can also probably start examining some other habits that need to change: collecting invoices in a more organized way, making sure they’re on time, and perhaps switching a billing app that’s charging too much or figuring out a way to avoid other types of bank fees.

Track Spending Down to the Penny

Tracking expenses is 10x more important for freelancers because we tend to have a false sense of “spending ability.” We get a $900 check in the mail, and where does it go? Maybe a rent payment, but most of it will likely be spent at the mall. Freelancers can have a lot more in their account at any given time than someone with a traditional job, because our taxes, insurance, and other benefits are not being taken out of every paycheck. We sometimes forget we must do that ourselves.

Track Spending Down to the Penny
Image credit: bjmedios

Getting freelance payments vs. traditional job paychecks means that we often feel richer than we actually are. Freelance “paychecks” are bigger for their bang than other paychecks because they haven’t taken anything out yet. This tends to make us spend more freely, down to the daily stop at the coffee shop to an expensive pair of new boots.

Again, take a look at your bank statement to see where the money is going. Add it all up: is it more than you thought? Are some of the expenses still a mystery? Often times we tend to spend more on wants vs. needs, needs being things like rent, gas, insurance, grocery food, and business expenses. Of course, we don’t realize we’re even doing that until the end of the month when we tack the utility bill onto the credit card.

Get Real About Bills: Needs vs. Wants

Needs vs. wants is a huge gray area for many freelancers trying to take care of their finances. Without anybody automatically taking out (and paying) half of our expenses for us, like taxes, retirement, and health insurance, it’s our responsibility. Naturally, with so many tools and estimators available, the task has become significantly easier. For those with traditional jobs, the money they get with their paycheck is primarily free spending money, and with a few exceptions, the rest has been taken care of already. As freelancers, we tend to live by this same rule: “I got the check in the mail, so now I can spend it any way I wish!”

Get Real About Bills: Needs vs. Wants
Image credit: jurjen_nl

Stop: Pay Your Needs First

In order to finally get a realistic sense of what money we actually have, we need to imitate what an employment company would do. You run a business, so here’s the financially-responsible business part! Set aside percentages and/or fixed amounts for the things you need first. Then, count up the money you have in the end. That is your real paycheck.

If it’s a big enough payment, it can be easier to set aside bigger fixed amounts (like rent) until the end of the month right away. It can also be easier to set aside smaller bills like utilities and gas money that are generally the same each month. For smaller project payments, though, it can be more difficult to split up like this, so dividing in percentages can be useful.

Percentages, depending on your own particular set of circumstances, of course:

  • Taxes: 30%
  • Emergency Fund: 10%
  • Savings Account: 20%
  • Fixed-priced bills (if gradually saving up between project payments): 20%
  • Spending (your real paycheck): 20%

This will definitely vary from individual to individual, and there is no global, win-all, formula for personal finance — especially the ever-changing world of freelance personal finance. However, the above is a great place to start, or you can begin with your own system. Then, perfect it, and stick with it. Most importantly: never freely spend more than your “real paycheck” is worth. It may be in your bank account, but that doesn’t mean it’s alright to borrow from it for that new video game.

Tackling Debt (and avoiding it)

When trying to struggle out of debt, whether it’s a few hundred on the credit card, or up to several thousand on loans and cards combined, use the same concept above. Instead of using 20% for spending money, use only 10% and apply the remaining 10% to debt repayment. It will take more sacrifices and definitely smarter budgeting to get debt under control.

Tackling Debt (and avoiding it)
Image credit: pumpkinjuice

That takes care of the varying-income part of it all. Beyond this, though, take care of debt intelligently with traditional smart moves: consolidating, paying off high-interest cards first, and budgeting accordingly.

A freelance lifestyle and debt just do not mix well, so get rid of it as soon as possible. This, of course, exempts reasonable debt like car and home payments, school loans, etc. For over-spending debt, though, living with an unsteady paycheck can mean more unnecessary overdraft fees, credit card fees, and late fees.

Stay Educated – Further Resources

Staying educated about freelancing finances and just personal finances in general is a tip in itself for maintaining a healthy bank account. Add a few personal finance blogs to your RSS feed, and educate yourself further on techniques, tips, and best spending habits. Below are a few great resources to get started.


As freelancers, we tend to live in the moment a bit too much. This is a great trait in general, but not when it comes to budgeting and dealing with running a business. Always be thinking of the future: saving, planning for benefits, and of course, making more income as well. Money isn’t the key to happiness, but neither is living in a world of debt and unsettled bill payments. Having a steady hold on finances as a freelance designer can be difficult, but it is absolutely essential for peace of mind.

What are you favorite apps, tips, or methods for managing finances in a freelance lifestyle vs. having a traditional job? Is it more difficult and overwhelming? Or is having complete control over finances a rather beneficial part of the freelance life?

Kayla Knight is a web designer and frontend web developer. She specializes in responsive web design, progressive web technologies, and also knows her way around most CMS’s and PHP. You can find out more and check out her portfolio at


  1. / Reply

    Really nice and worthy contents.

    • Lorenzo S.,
    • December 1, 2010
    / Reply

    As a freelancer, I developed an advanced todo manager to organize my jobs as simply as possible, but with money and time tracking.
    Hope it helps you! :)

    • Ajeva,
    • December 14, 2010
    / Reply

    I love it when you wrote: Pay Your Needs First. It’s very tempting for freelancers to shop ’til you drop upon getting that freelance paycheck for a job done, without thinking of what will happen tomorrow. I think that freelancers must be serious about their finances… or they will only have themselves to blame when a dire need comes. Cheers!

    • Claire,
    • February 15, 2011
    / Reply

    interesting BUT also read this your never to young to learn

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