How a Freelancer Prepares for the Future

How a Freelancer Prepares for the Future


As a freelancer, planning for the future presents struggles different than those employed in a traditional 9-to-5 job. Being your own boss and working on multiple projects with dynamic clients is an excellent learning experience. It has brought me new career opportunities I never thought possible. However, it comes at a price.

Freelancing lacks the stability that conventional employment offers. Freelancers don’t receive the benefits employees get through their employers, including matched and managed retirement plans, paid vacation, bereavement, maternity leave, health benefits, and life insurance.

In addition, a freelancer’s income can fluctuate month to month, making intermediate and long-term saving complicated compared to those who are salaried. Complicated, but not impossible.

Below are a few tricks of the trade to help create some stability in an unpredictable profession. 

Related: Thinking of Going Freelance? Here's What You Need to Know


As I discussed in my previous article, money management as a freelancer can be easier if you set some ground rules for yourself.

For example, make sure to religiously track your income, as well as your personal and professional expenses. However, tracking your incomings and outgoings only goes so far when your income fluctuates each month.

To manage those variables, I recommend drawing up contracts that require clients to retain your services quarterly or bi-annually.

My income can fluctuate as much as $5,000 a month depending on one-off projects, new clients, lost clients, and project expenses. To maintain stability, I plan my finances one month in advance. I survey my income and definitive expenses. From there, I will set a rock bottom income threshold—in other words, the amount I must make to afford my personal and professional expenses. I also include 15.3% of that month’s wages as tax, as well as 15% for intermediate savings and retirement. Anything exceeding that number, I save for a month when I, for whatever reason, don’t reach my threshold.

At the end of every year, I survey my income and my “Rainy Day” savings fund. If there is quite a bit left over, I’ll contribute to my 401k before the end-of-year deadline.


For me, saving for retirement is probably the hardest part of freelance finance. I was spoiled by lush benefit packages at previous jobs. I simply selected a percentage of each paycheck that would be funneled into a retirement fund—a percentage matched by my employer, I might add. A financial manager would then invest my money into a mutual fund.

I’m far from a financial manager, so figuring out how to put myself on a path towards retirement as a freelancer was a struggle. But I figured it out; here’s how.

First, I read up on various types of retirement plans, including IRAs as well as a more traditional 401k. I looked into appealing options for freelancers and small business owners, such as the SEP IRA and Simple IRA. Armed with information, I spoke with a financial planner who helped guide me towards a solution, based on my age, income, and financial goals.

Armed with information, I spoke with a financial planner who helped guide me towards a solution, based on my age, income, and financial goals.

I definitely recommend doing some reading before heading to an advisor. You’ll want to be have a say in the way your money is directed and invested, moreso than if you were part of a larger, employer-led retirement plan.

If seeing a financial planner isn’t in the cards for you yet, I recommend opening a separate savings account and contributing 3-5% of your income (if you’re feeling comfortable, at times, possibly even matching your contribution!) each month. That way you’ll have savings to work with when approaching a financial planner in the future.


Retirement savings was a tough learning curve as a freelancer, but getting health, dental, and vision insurance was the largest obstacle to going freelance.

I avoided the change for a long time, for fear of dealing with the issues inherent in finding insurance coverage. It seemed confusing and expensive. I shouldn’t have been so concerned, though—there turned out to be quite a few options.

I started freelancing before the age of 26, so I was eligible for health insurance under my parent’s plan (they would have made me pay part of the premium and associated co-pays). And if I had been married, I could have been covered by my spouse’s insurance. However, that wasn’t the case.

I considered COBRA, a continuation health coverage program, since I was leaving a full-time job that entitled me to 18 months of insurance as a carry-over. But it was expensive and it wasn’t a permanent solution. I would have to cover the full cost of the plan, plus a 2% administrative fee.

also considered group coverage from various professional associations, as well as my alumni network. You’d be surprised how many professional associations and co-working spaces have group coverage rates. For example, WeWork, offers an especially great package through TriCare.

However, after considering all the alternatives—and taking into account the fact that I am fortunately young and healthy—I signed up for a low-cost plan via It includes very low premiums, but high deductibles—the perfect incentive to stay healthy and fit! 


People often think that working for themselves means a continuous vacation. But if you’re anything like me, that is not the case. You get back exactly what you put into your job, meaning you need to work a lot to make a lot. {Click to Tweet}

You get back exactly what you put into your job, meaning you need to work a lot to make a lot.

For me, that often means working through vacations. There have been a few times when I completely unplug—I don’t answer emails, send calls to voicemail, or only complete quick tasks for clients. But those are few and far between.

However, a lot of freelancers do take time off, be it for vacation, bereavement, or maternity leave. That’s where a “Rainy Day” fund comes in handy, as well as an air-tight contract with clients that gives you some leeway on standing calls and deliverables.

It also helps to maintain great relationships with your clients and outline expectations about your time off and when you’ll be back in action, so everyone’s expectations are met.

Related: 10 Qualities All Freelancers Need

Freelancing comes with a great deal of flexibility and freedom. {Click to Tweet} However, nothing comes without a cost, and when working for yourself, that means a loss of stability and the ability to plan for the futureIt comes down to weighing the costs and benefits of working for someone else, where your future is (mostly) planned for you and going at it alone and independently planning for your future.

I’m able to sleep better at night, knowing there’s a cushion in my savings account and my future is prepared for.