5 Money Mistakes I've Made as Freelancer

Freelance life can be rewarding. Having the flexibility to control your schedule and workload is life-changing. But navigating life as a freelancer is a learning experience. No matter what kind of work you do, it's normal to experience ups and downs throughout your freelance journey.

I've been a full-time freelance writer for over six years and love what I do. But I've made plenty of financial mistakes throughout my career. Today I'll share a few money mistakes I've made as a freelancer so you can learn from my errors and make different choices.

1. Not considering the work and time involved

In the freelance writing world, some work pays hourly. However, it's more common to be paid per word or project. Throughout my career, there were times when I took on projects that took much more time and work than I realized, which impacted my checking account balance.

As you take on new projects, make sure you calculate the estimated time it will take to finish the job and the full scope of the work involved. You want to be paid fairly and feel good doing the work. You may regret not considering the total time involved if the project takes you much longer to complete and it could impact your income.

2. Not saving up for time off

Planning for the days when you need to step away from your work is essential. Even if you love working, there will be days when you can't work. In my earlier career days, I didn't consider the need to save for vacations or sick days. Because of this, I felt guilty when I took time off to rest, heal from sickness, or spend time with loved ones. That's not a good feeling.

As a freelancer, you get paid when you work -- not your off days. It's best to set aside money for times when you can't work. It's also a good idea to save for days when work is slow or you're not feeling in the right headspace to do your job well. If you're forgetful, you can automate the savings process to stay on track and make your life easier.

3. Not diversifying

As a freelancer, it can be easy to fall into a state of comfort -- but that can be dangerous. At one point in my career, I became very reliant on a big client of mine. I enjoyed the work, we had a great relationship, and they paid me well. So, I didn't continue taking on new projects. When the company paused its projects, I was in a difficult financial situation.

No matter what kind of work you do, it's recommended that you diversify your projects, clients, and portfolio. Doing this makes freelance life more exciting and can help protect you if you lose a project or client or experience significant industry changes. You want to ensure you have some income coming in at all times so you can pay for your living expenses.

4. Not saving for taxes

During my early freelancing days, I didn't prioritize setting aside enough money for taxes. Instead of saving money regularly, I'd stress out about my next quarterly tax payment a couple of weeks before the payment was due. This poor choice caused unnecessary financial stress, and my lack of planning often required me to pick up last-minute projects.

I've since learned from this mistake. I now set aside money bi-weekly so I have enough money to make my quarterly tax payments when they're due. I stash my cash in a high-yield savings account, so I earn interest. Now I feel well prepared to meet my tax obligations.

5. Saying yes to the wrong projects

Not every project will be a good fit for your experience or interests. When a new project comes your way, it can be tempting to say yes. After all, you probably don't want to turn down work. But I caution you not to take on more work than you can handle. What you could handle three months ago may not be what you can handle today -- and that's okay.

Throughout my freelance experience, there were times when I said yes to projects that I should have declined. Not only did I create more stress for myself, but I was also filled with resentment, making it even harder to finish the work. Only take on work that feels right for you.

Don't neglect your finances

If you like controlling your own schedule and workload, are highly motivated, and prefer non-traditional work, becoming a freelancer could be a good solution. But make sure you consider your personal finances as you make critical business decisions to avoid expensive mistakes.