Financial Planning for Freelancers: Crafting a Business Plan for Financial Success

June 28, 2023
Man looking at his laptop

It’s easy to forget, but you are not just a freelancer: you are running a business, whether you’ve registered it or not. 

A critical aspect of running any successful business is financial planning. Yet most photographers, copywriters, graphic designers, and caterers aren’t versed in business management, let alone accounting. On top of that, freelancers often have irregular incomes, which can make it challenging to budget and manage expenses.

In this blog, we’ll explore financial planning for freelancers. This entails creating a freelance business plan, researching insurance, planning for retirement, and more. By taking control of your finances, you can build a sustainable freelance career and the financial future you deserve.

7 Steps to Set Yourself Up for Financial Success

Understanding freelance finance is key if you want to grow your business and protect your assets. Without a solid financial plan, it can be challenging to manage your finances, pay bills, and save for the future. Here are seven steps you can take to set yourself up for financial success:

Step 1: Open a Business Bank Account

One of the first things you should do as a freelancer is to open a business bank account. This will help you keep your personal and business finances separate, making it easier to track your income and expenses. It will also make tax time much easier, as you will have all of your business transactions in one place (though you can also export these directly from the Lunafi app).

Step 2: Create a Freelance Business Plan

Creating a freelance business plan will help you establish clear goals, define target clients, develop effective marketing strategies, and create a financial roadmap that keeps you on track to achieve your career goals. Your business plan should include your products/services, target market, pricing strategy, and marketing plan among other things. You can learn more about how to draft a freelance business plan (and find a template) here.

Step 3: Build an Emergency Fund

One of the major drawbacks of freelance work is that you never know when work will dry up or when an unexpected expense will arise. That's why it's important to build an emergency fund. Aim to save at least three to six months' worth of living expenses. This will give you a cushion to fall back on in case of an emergency.

Step 4: Track Freelance Finances

It should go without saying that tracking your freelance finances is crucial. Accounting software like Lunafi allows you to track and categorize business expenses, so you can see where you’re spending the most, and where you might be able to cut back.  This also makes it easier to identify deductions and file your taxes come April. Since Lunafi is designed specifically for freelancers, our software can pick up on business expenses and write-offs that might otherwise be missed – things like fitness equipment or home office lawncare (so you can get your yard looking pristine 😉).

Step 5: Tax Planning

Freelancers and sole proprietorships are required to file quarterly. By tracking your earnings and expenses (via spreadsheet, Lunafi, or any other financial software) you can accurately gauge your financial liability in real-time so you don’t under or overpay. Make sure to set aside a portion of your income each month to cover your tax bill. You may also want to work with a tax professional to make sure you are taking advantage of all possible credits.

Step 6: Retirement Planning

Retirement planning is important for everyone, but it can be especially challenging for freelancers. There are several options (read our blog dedicated to this topic here) but here’s a brief overview of the most common plans:

  • Simplified Employee Pension (SEP) IRA: Offers high contribution limits and flexibility for small business owners to save for retirement while benefiting their employees.
  • Solo 401(k) or Individual 401(k): Allows self-employed individuals to contribute as both the employer and employee, providing the potential for larger retirement savings.
  • Roth IRA: Offers tax-free withdrawals in retirement and allows for tax-free growth of investments, making it an attractive option for individuals who anticipate being in a higher tax bracket in the future.
  • Traditional IRA: Allows for tax-deductible contributions in the year they are made, potentially providing immediate tax benefits, and offers a wide range of investment options to grow retirement savings.
Step 7: Freelancer Insurance

Finally, account and budget for freelancer insurance. This includes health insurance, but also disability, and liability insurance. Freelancer insurance can help protect you and your business in case of an unexpected event such as an injury or disgruntled client.

Voila! That’s it. You’re well on your way to crafting a financial plan that will make your chosen career a lucrative one that aligns with your goals. Just remember to…

Audit & Adjust Your Plans Quarterly

Times change and life throws curve balls – especially when you’re self-employed. That’s why it’s important to regularly review and adjust your financial plan and business strategies to ensure that you stay on track to meet your goals. 

One way to do this is to conduct a quarterly audit and adjust your plans accordingly. This will help you stay on top of your finances, identify areas where you can improve, and make necessary changes to ensure your continued success. 

This strategic audit should always address 2 key components:

  1. Professional Development
  2. Pricing Strategy
Invest in Professional Development and Expanding Skill Sets

As with any career, you should set aside the time to invest in professional development and expand your skill sets. This will not only help you stay competitive in the marketplace but also increase the value you can offer to clients.

Consider taking online courses, attending workshops or conferences, or working with a mentor. Many online communities – especially those tailored to your particular profession, like Jacob McMillen’s Write Minds for copywriters – offer mentorship programs. Find a program that genuinely excites you so this investment is an exciting opportunity, not a chore. This will help you stay up-to-date with the latest trends and technologies in your field and ensure that you can offer a wide range of services to clients.

Of course, as your own employer, you will have to budget for this professional development and mentorship, so be sure to take that into account as you plan for the year ahead.

Pricing Strategy: Reflect Experience and Market Demand

You should always charge what you're worth. That means regularly reviewing and adjusting your rates to reflect your growing experience and market demand. This will help you stay competitive and ensure that you are earning what you deserve.

To determine your rates, consider factors such as your experience, skills, and the market demand for your services. You can also research industry standards and compare your rates to those of other freelancers in your field. If you find that your rates are too low, consider raising them. If you're having trouble finding work, don’t lower your rates as a knee-jerk reaction. Assess your marketing tactics, messaging, and target audience first.


As a freelancer, it's crucial to remember that you are not just providing a service; you are running a business. Financial planning for freelancers is a fundamental aspect of business success, but don’t be embarrassed if you’re not a pro at this particular skill – most freelancers aren’t. 

By implementing the steps outlined in this blog – opening a business bank account, creating a freelance business plan, building an emergency fund, tracking finances, planning for taxes and retirement, and obtaining freelancer insurance – you can gain control over your finances and pave the way for a sustainable freelance career. And remember: regularly auditing and adjusting your plans, investing in professional development, and setting appropriate pricing strategies will contribute to your ongoing success.

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