Header bg
  • section background

    How to manage your money as a freelancer

    Hero bg 2

    Managing your money as a freelancer is one of the trickiest things to do. You need to worry about invoices, cash flow, taxes and more. If you’re not on top of everything, things can quickly get out of hand.

    With a strategy in place, getting a hold of your finances can be easy, but it’s not that simple since you need to be on top of so many different things. Here are some tips on how to manage your finances as a freelancer.

    Make a budget

    It doesn’t matter if you freelance full-time or if it’s just a side hustle, you need to have a budget in place. While your income may fluctuate from month-to-month, the odds are your expenses will remain fixed. Create a spreadsheet and list all of your monthly expenses, this will quickly show you how much money is going out. If your income exceeds that amount every month, you’re doing okay.

    That said, breaking even is likely not the goal for most freelancers. Hopefully, your income exceeds your expenses on a regular basis so you can build up your savings or expand your business. Having a budget will keep you on track.

    Build an emergency fund

    Since your income can change every month, it’s a good idea to build an emergency fund that you can fall back on in case you see a decline in your earnings. It’s recommended that you build up at least three months of expenses in your emergency fund. This way, you’ll be covered for a good amount of time so you can focus on getting back onto your feet.

    Get on top of your invoices

    Invoicing is a pain point for many freelancers, but if you don’t send your clients an invoice, then you’re not going to get paid. The easiest way to ensure you’re on top of things is to use invoicing software. By doing this, you can track who’s paid you and what’s outstanding. But first, you need to know how to go about creating an invoice, as a poorly written invoice can cause delays or incorrect payments.

    Alternatively, you could track things manually by using a spreadsheet and an invoice template. Just be sure to log when you’ve sent your invoices and when you’ve been paid. It’s a good idea to find out what the typical payment schedule is with your clients so you can follow up if your payments appear to be delayed.

    Make sure to claim your expenses

    Generally speaking, anything related to your business can be claimed as a business expense. For example, if you work from home, you can claim any relevant expenses such as your mortgage, internet, and hydro based on what you use for work. That means if 30% of your internet usage is for work, you can claim 30% of your internet bill.

    With any expenses, you need to have some kind of record for you to make a claim. That could be a paper receipt or any monthly statements you get. Make sure you keep these records on hand for at least 7 years as you’ll need them in the event that you’re audited.

    Separate your personal and business expenses

    This should be obvious, but you need to separate your personal expenses from your business expenses. There’s nothing wrong with using one of the best travel credit cards in Canada to make business purchases, you just can’t claim any personal expenses on your taxes.

    To keep things simple, some people will get a business credit card so everything is separate from their personal expenses. This is also beneficial since business credit cards typically have detailed reports of your spending which can help you manage your business. If you’re frequently making purchases in a currency that’s not Canadian dollars, it would be beneficial to get a no foreign transaction fee credit card since it would save you the exchange fee each time.

    Set aside money for taxes

    Any income you make from freelancing is taxable. The amount of tax you pay depends on which tax bracket you fall in. Generally speaking, you want to set aside at least 25% of your income for taxes. If you’ve been making a good income, you’ll likely need to set aside even more as you may fall into a higher tax bracket.

    To help ensure you don’t spend any of your money that’s meant for your taxes, open an account with a digital bank such as EQ Bank. As soon as you get paid, transfer out some money to your digital account. By doing this, the money you’ve set aside for taxes is always separate which will hopefully encourage you to not spend it for personal reasons.

    Final thoughts

    Managing your money as a self-employed individual can be difficult regardless of how much you’re making. There’s more than one of handling things, so it’s up to you to figure out what methods work best for you. Once you get your finances under control, you’ll spend less time worrying which will allow you to focus on your business.

    Originally published November 30, 2020, updated August 25, 2023

    Back to APOLLO Magazine
    Share this article

    Get Tenant Insurance in less than a minute

    Get no-nonsense coverage that's the best value for your money. Purchase policies from your computer or phone, receive your documents instantly, and save when you buy online.

    Get a free quote

    4.6 rating

    Google Logo

    Get Tenant Insurance in less than a minute

    Get no-nonsense coverage that's the best value for your money. Purchase policies from your computer or phone, receive your documents instantly, and save when you buy online.

    Relevant articles

    section background
    section background

    Getting insured is as easy as 1 - 2 - 3

    Tell us (very little) about yourself

    Tell us (very little) about yourself

    Just tell us your address, your name, email and phone number. And that's it. We'll give you a price in less than a minute.

    Pay online easily and securely

    Pay online easily and securely

    You can choose to pay monthly or save money by paying for the entire year in one easy payment.

    Get your documents in your inbox - instantly

    Get your documents in your inbox - instantly

    As soon as you complete your purchase, you'll find your proof of insurance and policy documents waiting for you in your inbox.

    Get covered today - it couldn’t be easier

    We’ve provided more than 1,000,000 quotes to Canadians just like you. Give it a try!

    Google Logo


    4.6 rating

    1,581 reviews

    view all

    Across Canada

    Contact Us
    Apollo logo

    © 2024 APOLLO Insurance Solutions Ltd.

    111 Water Street, Unit 210, Vancouver, British Columbia, V6B 1A7

    APOLLO Insurance Agency Ltd. (o/a APOLLO Brokerage in the province of Ontario only) is a licensed retail brokerage, offering our clients with a comprehensive set of insurance solutions to meet their individual needs. APOLLO Insurance Agency Ltd. maintains necessary corporate licensing in provinces across Canada. Availability of products and service depends on licensing and product availability. The information that appears on this page is provided for information purposes only. Advertised products and prices are not guaranteed and vary based on insurance provider and/or insurance company's discretion and product availability.

    Transparency and Disclosure: APOLLO Insurance Agency's role is to provide you with exceptional service and the best insurance products that suit your needs. As a licensed retail brokerage, our compensation is based on a commission basis already built into your insurance premium and varies based on the product purchased through our platform. For a description of how APOLLO Insurance Agency is compensated and how this is calculated, please refer to our Compensation Disclosure document. For consumers in Ontario, please review the RIBO Conduct Fact Sheet and the RIBO Conduct Guidance document.