Bad Financial Habits That Can Cut Short Your Freelance Career

By  Karen Banes

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Freelancing is tough. And many new freelancers make it tougher by falling into bad financial habits. Sometimes right from the start. Here are a few bad habits to avoid if you’re trying to make it as a freelancer.

Treating freelancing like a job

Financially a job is very different from being a freelancer. When you have a job money comes in automatically, on time, each pay day. It’s easy to assume that as long as you have steady work, freelancing will be the same. But it’s not. At least not always. Some clients won’t pay on time. You’ll have to chase them. Even the most reliable clients may have a week-long window in which they will submit a payment, rather than a set-in-stone ‘pay day’.

In the early days of freelancing it can be a good idea to prepare for the ‘feast or famine’ nature of the freelance life. Cash flow varies. Income is inconsistent. It’s good to plan for future possible lean times when you have a great month. Especially when you’re just starting out.

Treating freelancing like a business

Yes you are officially ‘in business’ once you set yourself up as a freelancer, but a freelance business is different from most other start-ups. Most of us can probably start freelancing with the skills and equipment we already have, allowing us to potentially get started with very little investment. And that’s probably the ideal scenario. Spending out on a lot of new equipment can put you in debt, or eat up your savings, putting you under pressure to bring a lot of work in quickly.

I’ve talked before about how I started my freelance business with no real financial investment. Most businesses take a reasonable amount of money to get off the ground. Freelancing can be the exception. Take advantage of that. Keep start-up costs low.

Shoddy record keeping

Keeping accurate financial records is vital as a freelancer. You’ll need to pay taxes on that freelance income, and if you do have expenses you’ll want to offset those against those taxes. It’s easy to get yourself into financial trouble come tax season by not keeping detailed records. You’ll also find that keeping good records helps you track what’s working and what’s not, and which part of your business is most profitable, which will help you to be more successful going forward.

Not setting rates correctly

How much freelancers charge varies from one industry to another, but many new freelancers don’t charge enough, because they’re trying to undercut the competition. Keeping rates reasonable can be an advantage you have over big companies or agencies with high overheads, but don’t charge so little that you put yourself under financial strain. Have confidence in your ability and learn to charge what you’re worth.

Not outsourcing appropriately

As a freelancer you may feel like you’re out on your own. No employees. No payroll. No pressure. That’s an advantage of freelancing, but just because you’re on your own doesn’t mean you can’t delegate the tasks that just aren’t right for you. Some new freelancers try to do everything themselves, from designing a website to preparing their taxes. That can cost you a lot of time that you could be spending generating revenue.

It can be good to learn new skills, but you don’t want to spend dozens of (unbillable) hours on working out how to do tasks you can easily outsource. Focus on bringing in money with your core skills, and outsource things that would take you hours to work out to an expert who can do the job in an hour.

Being unclear about your services

One reason freelancers fail is that they really aren’t that clear on what they offer. This means they end up spending time on tasks outside their comfort zone that eat away at their time. If you focus exclusively on content writing, and a client asks you to also source five images to go with each piece of content, it’s fine to tell them that’s not a service you offer. Alternatively, you can tell them it is a service you offer and quote them a price for it.

That’s why it’s important to be clear on what you offer and what you charge. It avoids the ‘task creep’ we’ve probably all experienced in regular jobs, where we end up taking on a lot of extra duties that don’t really fall within our job description. At a job, it’s a hassle, but we’re generally paid to be there so it doesn’t hurt our finances. When that happens to a freelancer it generally results in more work for the same fixed rate, directly impacting finances.

Avoiding these few bad habits will help you keep your freelance finances on track, and increase your return on investment, especially when you’re first starting out.

Karen Banes

About the Author

Karen Banes

I’m a freelance writer specializing in online business, personal finance, travel and lifestyle. I also work as a content creator for hire, helping brands and businesses tell their stories, grow their audiences, and reach their ideal customers. I’ve lived, worked and studied in six countries, across three continents. Stop by my blog to learn how to run your own (very) small business on your own terms. You can also connect with me at my website or follow me on

Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.

1 reply on “Bad Financial Habits That Can Cut Short Your Freelance Career”

HI Karen,
Keeping your rates high enough so you can give time to each project is very important and sometimes hard to do – especially in the beginning. Then, it becomes hard to raise the rates later on.

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