Emergency Funds 101 for Freelancers


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As a freelancer or self-employed professional, you certainly enjoy a wide range of benefits where your work life is concerned. You often get to choose which clients or companies you want to work for, and you can pick and choose which projects or jobs you want to spend your time working on. By altering your workload, you often even have the ability to control your income to a degree. Yet one thing you have little control over is when your hard-earned money will actually be paid to you.

Many freelancers and self-employed professionals have found themselves in the position of delaying payment on their own personal bills while they wait for their own pay to arrive. If you have been in this position yourself, you may have even contacted your clients repeatedly in an effort to get your pay sent to you more quickly. When done repeatedly and frequently, you may seem unprofessional to your clients and may even alienate them. So what can you do to prevent this from happening in the future?

The Benefits of an Emergency Fund

Establishing an emergency fund for yourself is the best way to prevent this situation from becoming a recurring event for you. Here are some benefits to establishing an emergency fund:

  • You have funds available in your own bank account that can draw from as needed.
  • You can draw from these funds as needed, using them as an interest-free loan. This is an advantage over costly options for borrowing money, such as turning to high interest credit cards to make ends meet.
  • You decrease your financial stress associated with pay cheques that are slow to arrive. You may still want to follow up with clients who are slow to pay. However, you may be more inclined to contact your clients at reasonable intervals and with a less stressed tone as your financial stress is abated.

You can find some great tips about saving up for your emergency loan in this article.

How Much to Save

The amount of money you want to have in an emergency fund will vary from person to person. Some factors to take into consideration include:

  • Your monthly expenses.
  • How frequently you bill your clients.
  • The amount of income owed to you by a typical client.
  • How many clients you work with on average at a given time.

The more varied your sources of income are, the more comfortable you may be with a smaller emergency fund. If all of your income comes from just one or two clients, the likelihood that a more significant amount of your income may be delayed in coming to you increases.

Of course, if you had several thousand dollars in reserve right now, you would not need to start an emergency fund. So it is not reasonable to expect to fund an emergency fund overnight by simply transferring money to a new account. Instead, you should plan on growing this fund regularly. With each cheque you receive, make small deposits into this account. Because of the nature of your business, you may need to draw on these funds from time to time as you try to grow it. This is what the money is for, do not hesitate to use it. However, look at each withdrawal as a loan, and make plans to pay it back once your next pay cheque arrives.

Useful Resources

Investopedia’s definition: a concise explanation with a handy video explaining what an emergency fund is all about.

Dave Ramsey’s guide to building an emergency fund: a nine-step-long guide to building up your own emergency fund from the king of saving money.

Why you should start saving your fund now: a motivational post on the reasoning behind saving for an emergency fund.

To Conclude

Establishing an emergency fund can be one of the best financial moves you make as a freelance or self-employed professional. This is a move that can greatly decrease the stress associated with your fluctuating income levels and working with clients who are slower to pay.


  1. Great post. Freelancers have to always remember to save! Great tips.

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