How to Find Financial Confidence as a Freelancer

Nearly 60 million individuals throughout the United States are freelancers, and that number is expected to continue climbing over the next ten years. Freelancing has many benefits, including working when and where you want and choosing how much or how little time you put in.

That said, being your own boss requires attentiveness to important financial details you wouldn’t otherwise need to think about when working for someone else. Protect your hard-earned money and sustain your financial freedom by finding your financial confidence as a freelancer.

Take control of your money, optimize your spending and grow your savings automatically

Know Your Health Insurance Options

Choosing health insurance can be challenging. If you freelance in addition to a full-time job, or you’re covered through a spouse or parent’s plan, you’re likely in the clear.

However, if you’re not covered through an employer, spouse, or parent, you need to find your own plan. Going uninsured is a significant financial risk – a 2023 KFF Health Insurance Survey found that nearly 50% of uninsured adults reported difficulty affording healthcare costs, and many delayed or skipped care entirely as a result.

Work with an agent to sift through and understand the health insurance options available to you. Don’t forget that health insurance premiums are tax deductible for self-employed individuals – you can write them off to lower your total taxable income for the year.

Know Your Tax Options

With the various software programs and online tools available, filing your own taxes may seem like the easiest and least expensive option. But there are several nuances that come with filing as a freelancer — paying self-employment tax, understanding which expenses can and cannot be written off, and more.

As David Cawley, partner at Fraim, Cawley & Company, CPAs, notes: “When someone is a regular W-2 employee, 7.65 percent is taken out of their paycheck for social security and Medicare, and the employer pays the other half. As a freelancer, you have to pay both the employee and employer portion of payroll taxes (15.3 percent of the business’s overall net profit), and that’s before even considering income taxes.”

As a rule of thumb, Cawley recommends paying estimated taxes each quarter to avoid underpayment penalties. Track all business-related expenses throughout the year – mileage, health insurance premiums, cell phone, home internet, and more. Many of these can be claimed on your return. The easiest way to stay on top of this is to track your expenses consistently so nothing slips through at tax time.

“Enlisting the help of a CPA can not only help lower a freelancer’s current tax liability by educating them on the immediate plans of action, but a good relationship can help grow the business and better plan for long-term goals, like retirement,” says Cawley.

Know Your Retirement Savings Options

Not having an employer-sponsored retirement plan means you need to get this critical financial asset in place yourself. The good news is that freelancers have several strong options:

• Individual Retirement Accounts (IRAs) allow you to open an account even without employees. A Traditional IRA lets you deduct contributions from your taxes, but withdrawals are taxed as income. A Roth IRA works the opposite way – no upfront deduction, but withdrawals in retirement are tax-free. Which is right for you depends on whether you expect your income to be higher or lower during retirement.
• Simplified Employee Pension (SEP-IRA) is popular among self-employed individuals and small business owners. You contribute as the employer, and in 2026 you can contribute up to 25% of net self-employment income, capped at $69,000. Contributions are tax-deductible and can be made in addition to a Traditional IRA.
• Solo 401(k) is worth considering if you have no employees other than a spouse. It allows higher contribution limits than a SEP-IRA in many cases – up to $23,500 as an employee contribution in 2026, plus an employer contribution of up to 25% of compensation, with a combined cap of $70,000. It also allows Roth contributions, which a SEP-IRA does not.

Working with a financial advisor is invaluable if you’re new to retirement savings. They’ll help you choose the right account type for your situation, tax bracket, and long-term goals – while ensuring you’re not leaving any tax advantages on the table.

The Bottom Line

Though you may have chosen to go the freelancing route alone, you don’t have to navigate the financial decisions by yourself. Working with the right professionals – and the right tools – makes a real difference. If you’re building your financial foundation as a freelancer, also read our guides on how to manage your money better and pay yourself first to set yourself up for long-term stability.