Freelancing — like any job, it has its ups and downs. Although the average freelancer earns around 17 percent more per hour than full-time workers, they end up making 28 percent less in total than their salaried counterparts. 

There are a lot of reasons why this could be, but in many cases, it’s simply because freelancers face unique barriers to saving their money. To keep your cash where it belongs, here are four ways you can manage your money as a freelancer better.

#1: Track your expenses

One of the toughest jobs you’ll do as a freelancer is anticipating your annual earnings. You’ll see how much you make on each job, but your earnings may be inconsistent from one contract to the next. 

Estimating how many jobs you’ll take on, and how much each will pay, can be challenging. With only a hazy idea of what you’ll earn, it can be hard to live within your means.

A budget can help you determine your financial limits, so it’s easier to anticipate your needs throughout the year. 

The key is to base your current budget on your earnings and spending from the past year. This will give you a greater perspective on the year to come. 

Whether you use a money management app on your phone or a homemade Excel sheet on your computer, make sure your budget:

  • Tracks your earnings: Looking at the past 12 months will give you insights into your workflow patterns. You’ll be able to see if you have a slow period during the summer before it picks up again closer to the holidays. You can prepare for these months by saving extra cash during your peak working time.
  • Tally your expenses: By keeping a close eye on your yearly expenses, you’ll be able to catch bad spending habits that limit your ability to save — like going out for that takeout coffee every morning even though you have beans at home. It will also simplify tax season if you need to show proof of work expenses.

#2: Deduct taxes from every invoice

Even though tax season is over for another year, you’re probably still feeling a little tender about the whole experience. Although taxes are stressful for most people, the pressure is worse for the average freelancer.

You should look at the average office worker for inspiration. Full-time employees fill out W-2 forms to arrange automatic withdrawals from each paycheck to cover what they owe in taxes. These regular deductions are easier to handle than owing one lump sum come Tax Day. 

You can do the same by applying self-imposed deductions from every invoice. The general rule of thumb is to save roughly 30 percent of your earnings for taxes. However, this calculator can put a more precise number on what you’ll need to set aside for Medicare and Social Security Insurance, in addition to income tax.

Whether it’s more than 30 percent or less, shelter this money in a dedicated savings account. If you ever feel tempted to dip into this account before tax season arrives, remember the money you keep here is technically already owed to the government. 

#3: Save for an emergency

Most financial advisors recommend freelancers save more money than salaried workers due to the volatility of your work. They suggest saving as much as one full year of income — which is no small feat!

This may be an intimidating goal, but don’t let that stop you from putting a portion of each invoice aside for an emergency fund. 

If you’re finding it hard to juggle both tax deductions, savings, and bills, return to your budget. It can show you spending habits you can limit or eliminate entirely to free up extra cash. While takeout, entertainment, and miscellaneous shopping are common categories for overspending, don’t be afraid to look at regular expenses like utilities and phone bills to see if you can lower what you pay.

If you’re starting from scratch, it may take a while before you have a substantial rainy day fund that’s ready for emergencies. Until then, you may need to borrow an installment loan or line of credit for when an unexpected bill or repair comes your way.

This can be hard for a freelancer, as some mainstream banks may not lend cash to self-employed people. Luckily, there are alternative lending opportunities online that provide an easy, convenient source of cash. 

If you’re looking for the fastest way to borrow, make sure you check to see if a lender requires you to have a full-time job or just prove you have a regular source of income. That way you can apply for an installment loan knowing you meet the requirements. 

Keep this option in mind when a client pays you late and you need to invest in new equipment. These short term loans can be a lifeline when your savings are still small.

Being prepared is the key to being a financially secure freelancer. Research your options and start thinking about how you use your money carefully. When you can account for the cash going in and out of your hands while making regular contributions to savings and taxes, you’ll stop wasting money and start reaching your full earning potential.