emergency funds

Saving While Self-employed: Tips from the Trenches


Let’s start by admitting that budgeting and saving when you’re a self-employed freelancer or artist is exceptionally hard. How do you set a monthly budget when your income changes from month to month, or week to week? Having to figure it all out on your own is no joke, so that’s why we’ve put together a few tips to help you save. You’re at your best when you can focus on chasing the dream without stressing over your wallet.

When you can’t predict your income with certainty, focus instead on what you can predict. Setting a budget like a pro begins with figuring out fixed expenses.

Setting a Budget

It all begins with identifying fixed expenses: the cost of being housed, fed and with access to the things needed to keeping you hustling. Carefully—and honestly!—distinguish these from other variable types of discretionary spending: happy hour drinks, eating out, movie tickets or Netflix, online shopping, Lyft rides—the usual suspects for those times you want to treat yourself.

Identifying and Calculating Fixed Expenses

Fixed expenses are usually:

  • Education or childcare costs, including things like tuition or daycare

  • Transportation costs such as car notes, insurance, and gas, or public transit fares like Metrocards and bus passes

  • Housing costs, such as rent or mortgage

  • Outstanding debt payments like student loans, credit card debt

  • Utilities (gas, heat, water, phone, internet)

  • Groceries and food

  • Healthcare costs (insurance premiums, plus any prescriptions or medicine)

  • Taxes: As a self-employed artist or freelancer, you’re solely responsible for withholding and paying employment taxes so alway, always, alway set aside money for taxes. If you’re unsure how much to set aside use a recent tax return as a basis for your estimate.

(One easy way to remember these is by looking at the first letter of each: ETHOUGHT.) Calculate your total monthly fixed costs by adding all individual fixed expenses together.

Living on a freelance or self-employed artist’s budget often means relying on last month’s previous earnings. Because income can fluctuate, it’s mission critical to know exactly how much money to put aside each month to cover expenses for the following month. Tracking fixed costs lets you know exactly how much of your monthly income you need to save in order to cover living and work-related expenses for next month.

List and Calculate All Your Sources of Income

Tracking your income is as important as tracking your expenses. Figuring out exactly how much you bring in each month helps you plan and manage your budget effectively. Your sources of income include earnings from any jobs, residual income from royalties, income from any disability benefits or government programs, and any financial help you maybe receiving.

Calculate your total monthly earnings by adding all your sources of income together.

Identify Patterns in Your Income

Budgeting is always easier when it’s more predictable.

As a freelancer, you expect your income to fluctuate, but these fluctuations aren’t necessarily random. Tracking your monthly income overtime gives you the historic data necessary to recognize patterns and make inferences on your earnings. Look for trends in your monthly income. Do your lean months correspond with off-seasons or low-demand periods in your industry? Do you travel more frequently at certain times in the year? These types of questions help make your income and expense more predictable. Harmonize your wallet and your hustle by anticipating expenses whenever possible, and saving for them when times are good. Incorporate any trends you discover into your budget planning.

Building Your Budget

Now that you’ve listed your total monthly income and expenses, subtract your total income from your total fixed expenses. The formula couldn’t be simpler:

(Total monthly income) — (Total fixed monthly expenses) = Savings & Fun

50/30/20 Rule

Okay, so you’ve crunched the numbers, and even looked over your expenses and found a few places to cut back (seriously, you should!). Now what? How do you know if you’re saving enough, or spending too much?


A great rule of thumb for budgeting is the 50/30/20 rule. The idea here is to:

  1. Limit your fixed expenses to a maximum of 50% of your total monthly income

  2. Limit your discretionary spending to 30% of your total monthly income

  3. Allocate the remaining 20% of your income toward savings

For many freelancers in New York, the cost of housing can make hitting these budget specs pretty tricky, but aim for as close to this breakdown as possible—especially for saving.

Other Tips and Tricks

Save Money by Automating Bill Payments

One of the easiest ways to save money is to avoid late fees, penalties and, if possible, interest associated with past due or late payments. Falling behind on payments can have a ton of expensive side-effects, all potentially ruinous to your hustle. These range from expensive fees to increased interest and lower credit scores, and even potential repossession of property. Automating your bill payments is a great set-it-and-forget-it way to avoid late fees, but does require you to have a good handle on both your income and expenses. Avoid potential overdraft fees from your bank by ensuring you have enough funds in your account to cover automatic bill payments.

Start an Emergency Fund

Open an account dedicated to potential emergencies and unexpected expenses, or anything else Murphy’s Law might have in store. A separate account is a great place to put some extra cash when times are good. Your emergency fund is a safety net for emergencies and unexpected expenses only! Consider an online savings account if you’re tempted to dip into your emergency stash.

Fight the Urge to Splurge, and Use Credit Cards Wisely

Resist the temptation to swipe your way out of a financial rough patch by leaning on your credit card. Each time you swipe your card, you’re increasing debt expense—a fixed expense!—and therefore reducing your available monthly income in the future. The same of course holds true for treating yourself: splurging today means less savings for tomorrow. Don’t stick Future-You with the stress and responsibility of solving financial problems created on a whim!

Find the Best Financial Offerings for You

As previously discussed in our post The 6 Best Banks for New York City Freelancers and Artists, discovering banks and credit unions that jive with your lifestyle can be tricky. But all the clever planning in the world might still go awry if you're not using the right tools for the job. Lifesaver makes finding the right tools easier than ever before by intelligently matching you with the very best financial offerings from your community, and with technology companies from around the web. 

Questions? Comments? Feel free to get in touch!