Financial Resource Center

Money Management

Money Strategies for the Self Employed

by Jennifer Garrett / August 29th, 2020

It's feast or famine for a lot of freelance writers, artists, seasonal workers, and those working on commission, but it doesn't have to be. With a budget and some discipline, even workers with fluctuating incomes can experience some of the stability that their 9-to-5 friends and relatives enjoy. Consider Cary Shafer, a sculptor from Fort Wayne, Ind., who has worked for himself since the mid-1980s. He’s never had a regular 40-hour-a-week job that he hated, he’s worked in Europe, and he even has a second home in Colorado. Shafer has the freedom to pursue the work he loves and the flexibility to do it on his own schedule. It's the kind of life that artists and writers only dream about, but Shafer is quick to say that he doesn't go to Starbucks every day. "You can eat ramen for a while if that's what it takes to do your work," he says.

Minimize fixed expenses

Shafer has made choices and sacrifices so that he could make a living off his craft. Having a base in Fort Wayne, for example, is affordable. He bought a studio there and rents out enough space to cover the total cost. He lives in a modest home and does not drive a flashy car. He works hard to avoid taking on debt, and he saves aggressively in case he doesn't get another project for several months.

Save some of every paycheck—big or small

In addition to living fairly lean, Shafer does another smart thing. Whenever he gets a big paycheck, he puts that money into savings. Establishing a saving habit is one of the most important things self-employed workers can do. The amount to stash away depends on the person, but a good rainy day fund should cover between 3 to 8 months’ worth of living expenses. Try to save around 30% of your income to cover tax liabilities and to establish this emergency fund. 

Plan for taxes

Taxes can be especially vexing for artists and writers, particularly early in their careers. Many artists fail to save enough to cover income and self-employment taxes. Some don’t know what they can and cannot deduct to minimize their tax liabilities.

Keep careful records of money coming in and money going out so you can capitalize on allowable deductions at tax time. An easy way to do this is to use programs like QuickBooks. Also, keep a separate business checking account and credit card from your personal ones. Not only will separate accounts and cards simplify tax preparation, they will also make it easier to track your earnings and expenses. The people at your credit union can help you establish these separate accounts.

Get better at budgeting

It may be daunting to create a budget for the first time, but it’s essential. Consistency helps self-employed individuals minimize stress and avoid overspending when money is flush. And that will keep them in business not only when income is light but also for the long term. It takes work and discipline, but the longer you do it, the better you’ll get at it.


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