When I started freelancing, I thought I had the smartest business model in the world. I had no overheads to get in the way of launching my business. I didn’t need to hire a shopfront. I didn’t need inventory. Because I was freelance, what I was selling was my expertise and creativity. Zero upfront costs! I just needed a laptop, a couch and all the money I was going to rake in was mine, mine, mine!

However, just a few months into my freelance career, I discovered how wrong I really was.

There are plenty of expenses that come with being a freelancer, even if you’re a freelancer that just works from your couch. You might find you’re spending at least a grand a month in expenses, depending on what tools you need.

Why is it important to know?

Knowing your expenses is one of the elements to help you decide how much to charge your clients. It helps you set your rate if you know how much you need to spend each month to run your business.

You need to consider how much you need to pay yourself each month to live a happy life, what your expenses will be, and then add a little profit on top to help build a buffer for quiet times. From there, you can then work out how much you need to earn each month to break even; and that will help you determine how much to charge for each job.

The problem when you first start out is you just don’t know what your expenses will be, because you’ve never done it before!

Typical expenses for a freelancer

Every freelance business is different. Some people will want to invest more or less into specific tools, based on your needs. Some might need specialised software to get the job done.

In my first year, I used a lot of free tools for many months. I had more time than money, so I could dedicate a little more time to manually doing tasks that paid software would streamline.

But over time as I got busier, I had less time and I found I needed to upgrade to help me spend my time more efficiently.

I also made mistakes and bought things that I didn’t actually need. I subscribed to services that I didn’t use, so I spent thousands on things I thought I needed but I didn’t really and only found out after I was underway.

Now, I use free versions of products for a while until I know that I really need it. I also ensure I set aside time to learn how the new tool works to ensure it’s worth the investment.

So, what are the key things freelancers need to consider that they will spend money on over their first year or two? Here’s my take.

Website and email

Yep, you probably want a website so you can show off your skills. You might DIY it with a drop-and-drag builder like Squarespace just to get the ball rolling. This still has a monthly hosting cost. If you aren’t confident building your own site, you might hire someone to build it, which is usually an investment of a few thousand.

Related: Search the Freelance Jungle Directory to find local web developers

If you want your business to look slick, you might also have a custom email address and an email provider like G Suite to ensure your emails get where they need to go. Again, this is an annual subscription for services such as these.


You need business insurance. If you work in-house, some places require you to have insurance before you can do the job, so it helps to have it from the outset.

Otherwise, it’s important to cover your back. If you get sick or get injured, you want to make sure you’ve got income covered. No one thinks it will happen to them, but it does.

Accounting and tax

Tax time comes around every year. You might be all over your business taxes, but many freelancers feel more confident working with an accountant.

And, even if you do your own tax, you will probably want accounting software to manage the invoices you send, to track the payments coming in and to categorise your expenses. This software often has a monthly subscription.

Pro tip: Set aside money for your tax bill. A lot of accounting software will let you know how much you’re likely to need to pay each year, so don’t spend all your cash on gorgeous new stationery (so tempting!).


You don’t have an employer paying super, because you’re now your employer. Your 65+ year old self will thank you that you’ve set aside money so you can live comfortably in the future. Regularly set aside a portion of your pay, or automatically transfer super contributions so you’ve got your butt covered. Time is your BFF when it comes to super, so even if you’re only investing a small amount each month, it is better than nothing.

Pro Tip: If you have a client spending more than $450 with you a month, they should be contributing to your super.

Tools of the trade

You might not be a graphic designer or video editor, so you don’t need big-ticket software like the Adobe Suite.

But there are tools you do use every day that you might totally forget about. Microsoft Word. Canva. Grammarly. Dropbox. Sure, there are free versions of most of these, but over time, you may find you need to subscribe to the paid versions of many of these to provide a better quality product.

Time tracking and project management

The first big lesson I learnt in freelancing is that you need to track your time so you can get an indication of whether the amount of time you spent on a project equates to the amount you charged. For this, you need a time tracking tool. Again, there are plenty of free ones, but you might love the reporting that comes with something that is paid.

As you get busier, project management software, or to-do list software, is another essential so you keep on top of all your client projects, due dates and deliverables.

 Advertising and marketing

We all gotta advertise, right? For some people, that means running Google Search ads or LinkedIn ads, but for others, it’s an email newsletter or using social media scheduling software to help get the message out. It costs money to make money, as they say.


You can’t do everything on your own. There comes a point in any business where you need a specialist to do something you don’t have the time or expertise to do.

It might be that you need a hand with your website or marketing. It might be that you need some professional head shots done for your website. It might be that you’ve got a big project and you need another set of hands on deck to be able to deliver it.

You might find there’s a time when you need someone else to help out; so keep in mind that contractors, like yourself, need to be paid in cash to be able to eat.

The recap

I didn’t realise what expenses even existed for a freelance business before I started. I naively thought that I could just have a website and all the money was mine.

But to run an effective business, there are several things you need to invest in so you can provide a quality service and keep your business running.

Having an idea of what expenses exist before you start will help you better plan for your first year of business, help you set prices which cover your expenses.

And, it will make it a little less stressful because you aren’t hit with quite so many ‘surprise’ expenses as you begin your trek in the freelance jungle.

freelancer finances

About Rachel Beaney

Rachel Beaney is a freelance social media specialist based in Sydney. When Rachel isn’t on deadline, she’s enjoying video games, playing with dogs and cooking. Find her online on Facebook, Twitter and Instagram, or check out her regular articles over at rachelbeaney.com.



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