Freelance Personal Finances: Your Guide

By / Mar 28, 2011 / Tips

Managing your finances as a freelance designer can lead to a multitude of cluster headaches and obscure nosebleeds. Luckily there are many tools, tips and software designed to ease the money burden, allowing you to spend more time on your work than time on the figures.

Billable Time

One of the major problems that occurs when freelancing is the burnout. This is where your time management has been stretched into the realms of doing too much for far too little. This generally occurs when you have no concept of your billable hours. Your billable hours are the actual amount of working hours you can invoice to clients. It does not include the amount of time you spend filing, marketing, networking etcetera – in essence, it does not include the time you spend running your business. If you can keep track of your billable hours throughout the day/week/month/year, you can effectively plan a freelance work structure, to avoid the trap of asking too much for your work or too little.

There are countless time-tracking tools out there, and Harvest’s is one of the most straight forward and easiest to use. There are simple start/stop timers to track the amount of hours worked, which can then be placed onto a weekly time-sheet. The time-tracking software is also mobile, so you can track your billable hours whilst on the go via your mobile phone.

Recommended Tool: Harvest


The work’s complete and you sit back to marvel your creation. You then realise you actually need to send an invoice to the client. What does it look like? What must it contain? Who is sent to? What? Why? Where? How? Basically without an invoice containing the right information, the gap between work completed and money in the bank, grows. Also, the time spent researching what’s needed in an invoice, is time lost on other works.

Happily there are templates, tools and tips out there on the great info-web and FreshBooks offers one of the best online invoicing softwares. No longer do you have to worry about the format, the look and the content, FreshBooks does it for you. It helps you send and manage your invoices and, above all, it saves time – a lot of it.

Recommended Tool: FreshBooks

Taking Payments

Handing out your account details willy nilly for payments does increase the risk of fraud and the cheque has joined the realm of the dodo. So, where in this modern world does the freelancer take the payment?

PayPal has it right on their site that they are safer, faster and everywhere, so having the client pay through PayPal is one of the safest ways for the money to wander into your bank account. There is a minimum fee per payment but why risk giving out your details?

However, what if you are out and about and the client wants to pay you there and then face to face, with their double platinum American super express Credit Card? They do not want to faff about through PayPal and fill in the deets. Well, Square have created a portable card reader for iPhone, iPad and Android. Just plug it in the headphone socket and swipe away.

Recommended Tools: PayPal, Square


The burden of every freelancer: the 20-30% that is set aside for the tax-man. When working through your tax return at the end of the year, going through all the receipts, all the expenses and all the glasses and glasses of wine to get you through the uphill struggle, a helping hand is always welcome. Calculating tax and working out what is a legitimate expense can be a time consuming burden. Once more, the computer whizz kids have been crunching the numbers to create you, the humble lone business person, a software that guides you like a GPS through your tax return.

TurboTax ask you simple questions to guide you step-by-step through your tax return, filling in the form as you answer. It constantly updates itself to the latest tax laws and guides you through in a friendly, yet thorough manner. It ensures that you will get the highest tax return possible, and above all, save you time. There’s no point getting a nice fat tax return if you haven’t got the time to go out and party on it… I mean put it back into your business, you go-getter.

Recommended Tool: TurboTax


What’s worse budgeting or tax? Drowning or burning to death? Both are extremely hard questions to answer but the budgeting and tax debate just clinches it. Budgeting is the bane of existence, especially when 82.6% of the time, you are complete wrong and realise the new pants will have to wait. One of the easiest ways to budget effectively is to create a forecast. Write down the amount of money you will definitely need for the month – or 12 months if feeling adventurous – so you know how much of your multiple strings of income will have to be set apart for your rent/food and other necessities (those new shoes are not a necessity). Once this is down, you can go through previous bank statements to find out how much income you earn on average month. If the average income is way over the necessary amount, then wahey, champagne time, if not, hide.

As soon as a forecast of expenses and incomes is created, you can work out what needs to happen to survive and have fun. inDinero is a software tool which aids you in your budgeting quests. It analyses your incomings and outgoings, to see the health of your business. With these stats it forecasts ahead, predicting the future of your finances. All the information the software provides is in real time, constantly monitoring your accounts. The tool also saves time by no longer having to do manual data entry. This bulk of information is easy to view, meaning the burden of budgeting effectively is eased.

Recommended Tool:

About the Author

Matt is a writer at Credit Card Compare, one of the top credit card comparison services in Australia. You can read more from him on their blog, The Credit Letter of follow @thecreditletter.

  • Jessica Mah

    thanks for the mention! Budgeting is definitely one of our more popular features now – looking forward to what lies ahead for our product!

    – Jess from inDinero.

  • Dave Dugdale

    I am so glad that you liked my Flickr photo so much that you included it on this page.

    I enjoy when people use my Creative Commons photos that I work hard on, but as I noted on Flickr (below the photo) I require that they provide me credit to my site.

    Please add my link when you can.
    Dave Dugdale

  • Ted Thompson

    Informative article Matt. Thanks for the heads up about Harvest.

  • Alex

    Thanks Matt for sharing this great post. I would recommend Invoicera ( as another awesome tool if you are looking for a simple invoicing, time tracking and billing solution. I’ve been with Freshbooks and Blinksale for while before I switched to Invoicera and I am happy to choose Invoicera over others.

  • Karen at Harvest

    Just wanted to say thanks for mentioning Harvest in your post — we’re pleased you find our app straightforward and easy-to-use, that’s the goal!
    Please feel free to get in touch with us if you do have any questions – we’re constantly improving things here, and we love to hear from our users!
    Karen, Harvest Community Manager

  • Matt27

    Anyone know of a UK version of turboTax?

  • Will

    Great article. As a freelancer, we can spend so much time on our business that we forget to take time for our financial planning. This article was very informative.

  • Karen

    Hi Matt,

    There is a neat little desktop tool called Fanurio . I love it! You can try it for free too. You can just click to start, pause it, etc and you can do nifty reports. I use it to track the time I spend on client projects.

    Even though I only bill hourly for consulting projects, it helps me to see how much time I’m spending to make sure my rates are in line. With Fanurio you can customize invoice templates using your own layouts and export them to HTML or PDF.

  • inspirationfeed

    Really enjoyed this article, I just hate the taxes.