ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

The Finances of Transitioning to Freelance Work

Updated on March 13, 2016
Be prepared before you quit your job to freelance!
Be prepared before you quit your job to freelance! | Source

You know you are ready to start freelancing and you are determined to be successful at it, so now it is time to get serious about it. With proper planning, you will be able to say good-bye to the constraints of a wage earning job and be free to earn money freelancing. One of the first things you will need to do is to determine how much you really make at your wage earning job. Then you can estimate what your freelancing income will be and how much you will need to save to survive the transition. In addition to financial considerations, you will need to be skilled at more than the work you will do freelancing, you will need to to have other skills to be successful.

Know Your True Income

You know how much you make an hour, but when transitioning to freelance work, you'll need to know your actual hourly income. When determining your true hourly income, be sure to include the following:

  1. Vacation time - how long do you intend to take on leave every year
  2. Insurance contribution - how much was contributed by your previous employer?
  3. Bonuses you receive - did you get any quarterly or annual bonuses linked to performance?
  4. Discounts you qualify for - were you able to receive a discount on work related goods or services?
  5. Company matches for pensions, stock, and anything else - did your employer pay in to any financial scheme?

Add the above benefits to your hourly pay. Once you do that, you can determine how much per hour that you need to earn freelancing.

Estimate Freelance Income Potential

You know what you can charge for your work and about how much you can make per week, but to estimate your true income, you'll need to know the expenses you will have as a freelancer. When you have your own business, you will need to calculate your expenses and that amount will need to be subtracted from your freelance income. Consider the following expenses when estimating what you can earn:

  1. Taxes (local, state and/or federal) - work out what you'll need to set aside to cover tax
  2. Business licenses - if your area of work requires a license to operate, factor in how much it costs
  3. Advertising - if you need to build up your clients, you'll need to advertise your services to them first
  4. Rental or purchase of property, equipment, vehicles, etc. - what will you need to run your business?
  5. Insurance (personal and for business) - do you need personal liability cover for your line of work?
  6. Accounting - a good accountant might be more expensive per hour, but they can save you a lot of money and headaches
  7. Business loans - will it take some seed capital to get started, and if so, what interest will you be paying on it?

Depending on the type of freelance business that you have, when you take time off you may need to have someone fill in for you. You will need to include that as an expense, also.

Skills Needed to be Successful

When you do freelance work, you won't have a boss to tell you what to do, this can be a blessing or a curse. Successful freelancers will need to do/be the following:

  • Customer service - you're front of shop now!
  • Set goals - you have to motivate yourself to get stuff done
  • Manage time - you've got to be able to stop yourself from working long hours on projects that don't pay well
  • Self-motivated - nobody will tell you to get back to work when you're your own boss
  • Be organised - without proper organisation, you'll waste time and make less money because time is money for any freelancer
  • Be decisive - beating round the bush doesn't help anyone, especially you!
  • Work well alone - working by yourself can be challenging, especially when you have long and arduous tasks to do
  • Avoid distractions - online it's so easy to get distracted for long periods of time, so it's up to you to stay focused
  • Accounting - you should probably get an accountant to do your books, but it's down to you to track expenses and keep receipts now

Evaluate what you depend on those above you to do and be responsible for at your wage earning job, and develop the skills needed to do yourself so that you have those skills when it's your responsibility.

Saving Before Transitioning to Freelance Work

Once you know your true wage earning income, actual expenses of freelancing, and are confident you have the skills needed to be a successful freelancer, you can start your business part time and save for the day you can do your freelance work full time. Before you can set savings goals, you will need to know the amount you need to save. You should have enough saved to cover living expenses, business expenses, and pay bills for both for three months. A separate savings for unexpected expenses will be needed, this one should be about the equivalent of 1 month of your income.

It will take some time to prepare, but you when you plan wisely, the transition to freelancing can be a successful transition.

Freelance Budgeting Tips


Submit a Comment
  • rosaflorence profile image

    R D Hayes 

    2 years ago from Oklahoma City

    I have been a freelance writer off and on for over 10 years. I had to stop every time I would get sick. I suffer from a couple of problems. Well, I have been out of the game for a while now. I just recently started publishing again but, I have had to start from the bottom once again. Things have changed from ten years ago and I have had to learn social networking and the new lingo of the internet.

  • genna088 profile image


    5 years ago from Tampa, FL

    This is such a practical hub! I think it's easy (at least, for me) to get caught up in the "romantic" aspects of freelance writing without considering the financial aspects. Thanks for this :)

  • PurvisBobbi44 profile image


    6 years ago from Florida

    This is a great hub with a guideline to pave the way to success. Thanks for writing this it will help so many just starting out and refreshes ways the ones who are experienced.

    Have a great Holiday

    Bobbi Purvis

  • denise.w.anderson profile image

    Denise W Anderson 

    6 years ago from Bismarck, North Dakota

    It is good to know that there are people who are actually successful at free-lancing. It gives me hope for the future!

  • JSParker profile image


    6 years ago from Detroit, Michigan

    Good hub. Voted useful.

  • creativegenius profile image

    Brian Scott 

    6 years ago from United States

    Wonderful tips, especially your checklist under "Income Potential" since many freelancers forget about these things.


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)