How to survive financial disaster as a freelancer

by Ann Brown

Working as a freelancer certainly has its perks – freedom, autonomy, more personal time. But on the downside, there is a lack of support available when a freelancer has a financial crisis. You can’t go to your company and ask for an paycheck advance.

Freelancers, however, can make sure they are prepared just in case they do have a major financial setback. One of the best ways is to already have some money earmarked for such a situation.

“Create a savings account and put money in that account during months of supernatural financial success,” explained Stephanie R. Caudle, a full-time freelancer and owner of a Black Girl Group, a micro job site created to connect companies who are struggling with diversity with African-American women freelancers.

Medical emergency can drain your finances fast, so it is important to be ready for one by opening an HSA (health savings account). “Like an IRA for health care, the fund contributed are not subject to federal income tax (at the time of contribution) and the interest earned on your HSA funds grow tax-free, too. Unlike a retirement account, these funds can be used prior to retirement for eligible medical expenses without paying taxes or early withdrawal penalties. For 2017 the max contribution for an individual is $3,400,” advises financial analyst and staff writer Ian Atkins of

In order to save, you have to be organized and in control of your finances. “Maintain a lean budget: Don’t commit yourself to unnecessarily high long-term budget items. The leaner your monthly budget, the better you’ll be able to weather an unexpected financial storm. Regular household expenses should be kept as low as possible, allowing you to grow discretionary spending when times are good (and after emergency savings have been built up),” says Atkins.

Make sure to have at least one steady flow of income. “Find at least one regular gig. Having one consistent stream of income, even if it wouldn’t be nearly enough to survive on, is crucial to ensure that you have some form of cash flow every single month. Regular gigs are also important to use when creating a budget – don’t depend on iffy projects to pay you in a timely manner or rack up spending on your credit card with hopes that a big check will come the next month. This can get you into a lot of trouble really fast,” notes Valerie Streif, senior advisor with, which focuses on hiring, managing, and mentoring hundreds of prospective job candidates.

Lastly, keep a stash: “Create an emergency fund and take it seriously. Everyone, regardless of their employment situation, should have an emergency fund,” suggests Streif. “For freelancers, it’s best to be on the safe side and have around six months of emergency savings. The more, the better of course, but six months would be a very comfortable amount to be sitting on in case of a bad couple of months or a lull in lucrative projects.”

Image credit: Photo courtesy of NeONBRAND.