How to Manage Finances as a Freelance Writer

While freelancing is a great way to get a foot in the door with professional writing, it presents unique challenges when it comes to creating a budget. First and foremost, the nature of freelance work is that it ebbs and flows: a highly lucrative month may be followed by a distinct lack of articles to write, and thus far lower income. The process also reverses, and a dry month may lead to a month flush with articles and the related budgetary improvements. Given this somewhat volatile earning scenario, a freelance writer needs to budget in a way that is distinctly different from their colleagues in other professions.

Create a Budget While Looking Backwards

In traditional employment circles, people know their monthly amount of pay and create a budget that anticipates getting those paychecks and working within their limitations. This is not the case with a freelance writer. While freelancers might certainly have financial goals for each month, they really have no idea if they’ll actually meet those benchmarks and make the amount of money they were hoping for at the beginning of the month.

Because of this quirk, freelancer should budget backwards — by planning the next month’s budget based on the earnings they made in the prior month. That allows them to work only with the earnings they’ve already secured an it ensures they won’t overestimate the amount of work they’ll receive and begin living outside of their means.

Resist Stagnation

Freelance writers might be tempted to enjoy their current gig and never look for something that might pay more per word or more per article. It’s easy to get comfortable in any job — freelance or not — but in this case, it can actually effect finances and budgetary considerations. Freelance writing typically rewards experience, and low-paying articles written at the outset of a freelancing career can typically be turned into a portfolio of reasons that a writer should move up in the world, write for a more lucrative website, and be paid more per word for their work.

As freelancing lends itself to this kind of advancement, writers will find it easier to not only create a budget, but perhaps to even expand their budget as their earnings increase. No “raise” is going to be handed to a freelancer. It must always be pursued and achieved independently.

Treat Bonuses Smartly

Occasionally, freelance writing websites and agencies will reward their writers with a bonus — extra money per word or per article during especially high-volume business weeks, or for other reasons. The temptation, or perhaps even instinct, is to spend this money immediately and enjoy the unexpected fruits of one’s labor. But this money should not all go toward discretionary purchases and “rewards.”

Instead, 40 percent of all bonus pay should be put in a savings account of some sort and kept as a rainy day fund. Freelancers, especially, will find that rainy days can pop up out of nowhere and turn into rainy weeks or months. These bonus funds should always be saved to prevent against future financial shortfalls.

See No Money, Spend No Money

The freelancers of the world would be well-advised to store their money in several different accounts. Their primary checking account should be supplemented by a savings account, a high-yield money market account, and other tools to store their money in ways that will promote its growth and prevent it from being spent. Money which cannot be seen — as it is hidden away in an account somewhere — is far harder to spend. And when money invested in savings or money market accounts goes unspent, it earns interest and grows. Because freelancers live a life of financial uncertainty, these accounts could serve as a lifeline in the most dire of situations.

Put “Bill Money” into a Savings Account

An easy way to make sure you’re prepared for a potentially rough month of freelance writing in the future is put enough money into your savings account each month to pay all of your bills — or the most important ones. But, after that money has been transferred to the savings account, it should never actually be spent on bills. Doing this every month will ensure the the savings account grows enough to cover several months’ expenses in the case of illness, a lack of work, or another emergency financial situation.

Common Sense Comes into Play

The responsible freelancer knows that the occupation is full of opportunity, and also full of risk. Much of that risk comes in the form of finances; therefore, using a little common sense and sticking more to saving than to spending will result in the best possible financial situation for the avid freelance article writer that wants to make money writing.