Budgeting for freelancers: a how-to guide

Irregular freelance income makes budgeting difficult, but also essential. Check out our guide to budgeting for freelancers to help build a budget that works for you.

5 min read

Budgeting for freelancers takes a little getting used to if you’re more familiar with being paid regularly every month, You have a unique financial situation and this is why budgeting wisely is so important. Are there any best practices to keep in mind? You bet! See our quick guide for key budgeting tips for freelancers.

For those with a monthly paycheck, budgeting is easier since they know their monthly income to the penny. Freelancers find it more difficult to predict their expenses when the income is variable. However, that shouldn’t stop you from monitoring your spending habits and keeping your finances in check! Here are a few simple budgeting strategies that you can benefit from as a freelancer.

Knowing how much you spend on essentials like rent, food, utilities, transportation and other fixed monthly expenses will help you better understand how much money you need to earn each month just to cover the baseline expenses.

Some months, you may earn a lot more than previous months and it can be very tempting to enjoy a spending spree to celebrate. However, setting a personal limit each month to put a cap on your spending will give you more financial security for those months where there is less money coming in.

Now you’re not getting paid for time-off, it’s important to plan your travels around your earnings. Just booked a 6 month contract? Then it’s a good time to book a break as your earnings are secure for quite a while. Got an empty few months coming up? Maybe hold up on booking that winter escape until things are looking brighter.

The 50/30/20 budgeting method is a useful tool for freelancers. Using this budgeting model, you’re advised to allocate 50% of your income on the baseline expenses (see above) and 30% of your income on variable wants, such as your gym membership, cinema, clothes, and similar expenses. The remaining 20% of your income should go towards savings, pension fund or debt payments.

It sounds like a lot, but budgeting wisely will let you build up your emergency fund for things like boiler repairs and visits to the dentist as well as your long-term savings plan—think university fund for kids or buying a home. For freelancers, keeping a rainy day fund is just as important as taking out freelance insurance. Your life is stressful enough without the extra money worries!

A freelancer man and a woman are discussing business over a notebook and a tablet.

Think of it as two separate clients—you wouldn’t keep project deliverables for two different clients in one folder, so why mix business and personal expenses? It will quickly get cluttered and confusing, making your wise budgeting strategies more difficult to follow. At N26, we’ve made it incredibly easy for freelancers and the self-employed to manage their money with three different membership plans and personalized bank accounts. It doesn’t just help you separate business and play, you can also receive fee-free payments in any currency and take out free ATM withdrawals! Now, that’s what we call freelance freedom.

Budgeting for taxes as a freelancer requires discipline, as the cost of not following the general advice is simply too great—you’ll be stressed out of your mind, not to mention the possibility of getting fined. Learn from the mistakes of others and set aside at least 25% to 30% of everything you earn, as in the majority of cases this will ensure you’re covered for the end of year tax bill.

White chair in a home office.

Being your own boss sounds like a dream, but you shouldn’t forget that being your boss also comes with serious responsibilities, such as saving for your future. Here are a few simple strategies on how to save money as a freelancer:

Once you get into the game of keeping track of your freelance pipeline, you’ll be able to predict your monthly earnings rather accurately. Make sure you start your month with a plan and a budget in mind to cover all expenses, top up your savings and keep a close eye on your personal expenses.

Trying to win over new clients can often involve costly dinners or cocktails, but try to scale this down by recommending coffee meetings or more casual get-togethers.

Some clients may want you to work from their offices during your contract, but try to negotiate working from home where possible to reduce your travel and food costs.

It’s one of the key rules for freelancers. When you know what purchases or expenses can be offset against tax, you can plan them better and budget accordingly. But beware of making purchases when funds are running dry under the excuse of “business expenses”. It’s still coming out of your pocket! Here’s a list of the most common business expenses that are tax-deductible:

  • Internet/broadband costs

  • Mobile phone plan

  • Office rent

  • Tech equipment, such as a new laptop, a laptop mouse, stationery, printer cartridges, etc.

  • Travel expenses, when related to business trips

  • Any professional training or online courses

  • Business books

  • Any professional subscriptions

  • Advertising costs

  • Website hosting

  • Industry-specific equipment, such as a camera for a photographer or a PlayStation for a game developer

Whichever online budgeting tool you choose, your savings goals are bound to receive a boost as soon as you automate this financial chore. Seeing exactly how much money you spend on different activities each month and keeping track of multiple savings goals can go a long way!


Going freelance is exciting, and now banking can be too. N26 are here to help with their free bank account for freelancers and the self-employed, which makes things easy, letting you earn 0.1% cashback on all purchases you make, and enjoy free card payments worldwide. It only takes a few minutes to set up, too.

N26 Business banking for freelancers and the self-employed N26 You: free travel and theft insurance, foreign medical expenses and more

By N26

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