Freelance writing is a tale of two worlds. There’s the good world which allows you the freedom to do what you want when you want which means you can also work as much or as little as you wish depending on your financial situation. But then there’s the bad world which has to do with not receiving a regular paycheck like someone who works a traditional 9-5 job. 

If you own a home, for instance, the stress that might come with having to pay for unforeseen expenses like an AC system that goes down or a fridge that goes on the fritz can keep you up at night. One excellent, money-saving solution is to invest in a home warranty. But is paying for a home warranty worth it

Says Cinch Home Services, you might not only be asking yourself if is it worth paying for a home warranty every month, but you might wonder what kind of warranty plan would be right for you. But home warranties are engineered to protect people, especially freelancers, who need to limit their out-of-pocket costs whenever something breaks down due to normal wear and tear. 

That said, what are some important money habits all freelance writers should learn to adopt? According to a recent report by The Write Life, when you begin freelance writing, your long-term goal is a basic one. That is, to earn enough cash to keep on doing what you love for a living. 

However, as time passes, lots of freelance writers find themselves wanting to earn more money for themselves and their families. But along with success comes sound financial habits. Even if you try and keep your finances as simple as possible there are some things you need to do to make sure you remain in good financial standing.  

In short, the better you manage your money the easier freelancing is. The more organized you are, it stands to reason the more money you’ll make. That said here are 6 money habits freelance writers will want to adopt. 

1. Separate Business from Personal Finances 

This step seems like a no-brainer, but too many freelancers don’t do it. Combining business finances with personal bills is a trap that’s too easy to fall into. You should keep your personal money separate from your business. But then, why bother if you’re the only employee? 

For the simple reason that when everything is combined, it’s hard to see how much revenue is coming in, how many expenses are going out, and how much profit is left over for you. In short, your business should have a separate credit card, bank account, and PayPal account.  

2. Regularly Pay yourself 

It’s important that you get into the habit of paying yourself on a regular basis. All it takes is a transfer of cash from your business account into your personal account. You need to keep a running account of these payments for you and your accountant. This isn’t required by law for freelance writers, but it’s said to be a good way to protect yourself since you can better estimate your earnings.

3. Invoice Smarter

Says The Write Life, you no longer need to waste precious creative time by typing out invoices on Microsoft Word, waiting for a check in the mail, heading to the bank to deposit it, then finally, checking off the process on a spreadsheet.  

In 2023, digital invoicing tools like Freshbooks make your life much easier. It allows for automatically invoicing your clients who can pay you instantly via PayPal or Zelle. They can even pay you in cryptocurrency if you so choose.  

4. Track Your Expenses

Whenever you purchase something, no matter how small, keep track of it and keep the receipt. This is important because when tax time comes, you will be taxed based on your business profit after your expenses and not on your revenue. 

Said another way, you are taxed based on how much money your business has leftover after your expenses are calculated, and not on the money you bring in. Want to avoid paying taxes altogether? Make sure you carry a loss every year. In most states, you can carry over a loss from previous years. 

Just remember to keep all your receipts that you will be used to qualify for deductions. You will need them in case of an audit. 

5. Profit and Loss Statements Should Be Reviewed Monthly 

You don’t need sophisticated software to create your own profit/loss statements. It can be done using a simple Excel spreadsheet. All you need to do is subtract your expenses from your revenue, and you will realize your profit or lack thereof. Easy Peasy. 

Keep in mind, if you find that you’re making substantial cash on a monthly basis, put some aside to pay quarterly taxes. 

6. Build a Monthly Checklist

Now that you know how to take care of your finances as a freelance writer, you can build a repeatable system that will take care of every one of your financial tasks. The system will assist you in what you need to do every month and therefore you won’t miss anything important. 

Schedule everything that needs to be done on a calendar for every month. You can assign yourself all of your financial chores at the beginning of every month. Just the process of creating this monthly checklist will relieve you of anxiety and stress. 

Being a freelance writer is one of the most rewarding jobs in the world. Just be sure to be smart about your money.