6 Financial Obstacles of Being a Freelance Writer

There are so many reasons why being a freelancer is fantastic. Great flexibility, income and avoiding the 9 to 5 are hard to beat but there are some financial difficulties that most freelancers face. If you are thinking about getting involved in freelance writing, here are six things to take into consideration.

The nature of being a freelancer has the potential for extreme variations in income. Rather than the traditional biweekly constant paycheck, a freelancer only gets paid after they finish a job. It is important that writers have a cash cushion to pay for expenses when the income is not coming in. A freelancer should have the discipline to save significant portions of their earnings during their productive times in order to build up this cash reserve.


Under many tax codes being a freelancer is essentially similar to being self-employed which entails significant responsibilities to satisfy the authorities. These responsibilities can be a huge shock to someone who is used to having an employer handle the tax calculations and withholding for them. It is vital that freelance writers maintain accurate and detailed income records and it may be a good idea to engage an accountant to help handle tax issues.


Deciding how much to charge for writing may be one of the trickiest parts of being a freelancer. Finding the ideal rate may take time and patience. New freelancers who do not have extensive bodies of work generally must settle for a lower price in order to get jobs. Once a freelancer has relationships with clients and a reputation they gain pricing power and are able to charge higher rates and be more selective of particular jobs.

Once a job is agreed upon or completed it is important that the freelancer receives payment. Common payment methods are online services (such as PayPal) but these often charge fees for each transaction. It is important that the freelancer and client both know the terms of the job and it is often incumbent upon the freelancer to keep records of work completed and to send invoices to the client for payment.

Self-employed freelancers may also on their own when it comes to procuring health insurance if they are not covered by a spouse/partner or other group plan. With the rising cost of health insurance it can be a major hurdle to find affordable yet adequate coverage. There are many options available depending on an individual’s health or financial status and there are also numerous organizations or industry groups dedicated to helping self-employed persons sift through the choices.

Self-employed freelancers are responsible for their own retirement savings and do not have the benefit of company 401(k)s and automatic paycheck deductions. Common tax-advantaged accounts include Individual Retirement Accounts (IRA). If a successful freelancer earns more than the income limits for an IRA there are other accounts (such as SEP Accounts) that may be established with the help of an accountant or financial advisor.

Discuss This Article

Comments: 5

  • Shelly says:

    Freelance writers (and freelancers in general) are a real bargain because they save companies tons of money! Companies don’t have to pay benefits, sick days, vacation days, and freelancers use their own equipment and maintain it. They only need to hire you when they need you so they are only paying you when you are productive. Freelancers need to take all of those benefits in account when setting fees. There are some freelancers who actually ask for the same rate that an employee would receive—not realizing that employees receive benefits and have the luxury of steady employment. Freelance rates should be set higher than what an employee doing a similar job within a company would make. If a freelancer does not do that..he or she will not survive for long because social security taxes, healthcare, business costs and other expenses would make it hard to survive as a freelancer.

    • Barbara Saunders says:

      Yes and no. It’s taken me years of trial and error and analysis to discover the flaw in the strategy of accounting for benefits, etc., in “the same job.” One can’t sell the same set of activities that a staffer provides for a higher rate. Just as employers pay for benefits, employers package and coordinate work tasks into complete services. A freelancer must either find a package to offer or subcontract to someone who offers a package.

  • Star says:

    Well said, Shelly! After 35 yrs of this, as sole support of my family, I would add that the present economy with all the cheeseballs such as Demand and Examiner and the 5 stories for $25 people has lowered the bar to limbo level. An “employer” rarely asks what you would charge–just says, “How about 5 cents a word?” They delay paying in some cases now. The bid sites pit freelancers against each other in a sprint to the bottom. Darn right, charge more than an employee would get an hour! Let them take it or leave it. If they leave it, you have recaptured the “opportunity cost”–meaning the time to find someone who respects you as a business person.

  • Stacey says:

    Although they can’t answer all of your questions, http://freelancersunion.org/ has some resources that can make things a tad easier . . . like info on health insurance, etc.

  • Jenny says:

    To some extent i admit that these finanical aspects are drawbacks of freelance writing but on the other side, the merits are of no match to the demerits. Companies nowadays prefer hiring freelance writers because they can be hired at affordable rates and are always willing to serve on the employer’s conditions.

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