Managing finances is one of the most strategic tasks in running a freelance business, either as a remote worker or as a digital nomad. Please note: this article should not be considered financial advice, it is recommended that you speak to a professional about your saving and investment needs.

With the recent Covid-19 pandemic putting a halt to many travelling plans and business opportunities, in many cases resulting in freelancers losing their jobs or seeing their income reduced dramatically, keeping a close eye on budget and being able to make financial plans for the future is essential.

It’s not all doom and gloom for freelancers though: after an initial setback in 2020 in the middle of the Covid-19 crisis when many freelancers were dropped by employers, they were also the ideal candidates for the new way of working, mostly remotely (see for example report from Silicon Republic).

Looking at a freelancing business’ lifecycle, sticking to a budget and working out how long client income can cover expenses and be invested can be made easier by using online tools.

In this collaborative post with Calculator.me we review some of the tools that can provide useful financial insights for freelancers.

The main ones being considered are:

• savings, particularly important before starting a business or before planning any travel
• budget planning, useful for the day-to-day management of the business and its cash flow
• retirement planning, which is vital for the nature of freelance businesses as their income can be unpredictable.

​Budget Planning Calculator

The budget planning calculator has a number of entries for specific expenditure, from housing to transport. While this particular calculator is more geared towards families and traditional office-based workers, the tool can still be useful for freelancers too to see how much you will need to set aside at a glance. You only need to enter the percentages of your income that you think you will have to allocate to each entry and the calculator will show the amount in dollars. The calculator already give you a range of percentages of income that you need to set aside, for example between 10% and 15% of income on transportation. Of course this figure may be higher for digital nomads because of flight costs.

As a way to improve the calculator, it would be useful to have a couple of customisable rows in which you can enter the category or categories that best apply to your situation. Similarly, being able to change the percentages manually could also be useful.

An essential part of the budget should include repayments for consumer debt, travel and medical insurance. Medical insurance is particularly important for freelancers because they are not normally entitled to sick pay (unless this is stated in their contract).

​Savings Calculator

Savings calculators can bring excellent insight into how much freelancers really need to get their business off the ground or to plan an investment to grow their business.

This calculator provides an at-a-glance look at the future value of investments based on your selected interest rate, monthly deposits and length of investment. It also takes into account the rate of inflation.

What’s interesting about this calculator is that it also breaks down returns as:

• daily
• monthly
• quarterly
• annual.

Each row shows interest earned and spending power.

​Retirement Planning

As discussed in a previous article, retirement planning shouldn’t be an afterthought for freelancers and digital nomads.

While it’s not common to become a digital nomad with a clear exit strategy, a nomadic lifestyle may not always be suitable long term.

Freelancers may experience periods of feast and famine, which make scheduled payments towards a retirement scheme unfeasible or at least not straightforward.

Also, the self-employed tend to put less money towards a retirement plan: for example, in the US only 30% of freelancers are paying into a pension scheme (Forbes).

The retirement planning calculator helps you towards your retirement goals, breaking down how much you will need to invest including the impact of inflation on retirement income.

These are some of the tools that freelancers can access to plan their financial future – the website also features calculators for mortgages and car loans, for example.