I read a report that said 40% of freelancers don't set aside money for taxes

I was looking at a study from a freelance union group last month, and that number hit me hard. It means almost half of us are basically flying blind when tax time comes around. I used to be one of them, scrambling every April to find thousands of dollars. The report said the average person in that group ends up with a bill over $5,000 they can't pay right away. Now I take 30% from every single payment and put it in a separate bank account before I even think about spending it. It's not fun money, but it saves so much stress. How do you handle your tax savings so it doesn't hurt so much?

3 comments

3 Comments

gray_hall41d ago

Set that money on fire the second you get paid. Seriously, open a second account at a different bank so it's out of sight. I do 25% right into savings labeled TAXES ONLY. Treating it like a bill you pay yourself first is the only way. That scramble for five grand is a nightmare I never want again.

joseph_bailey1d ago

Respectfully, that sounds like a great way to miss out on making your money work for you. Locking a full 25% away in a basic savings account, like @gray_hall4 suggests, just lets it lose value over time. A smarter move is keeping it all in your main account and investing the extra cash throughout the year. You can earn way more than the tiny interest a savings account gives. The tax bill is just one big payment, so as long as you're tracking your income you can plan for it without hiding money. That scramble only happens if you aren't paying attention to what you're making.

henry_anderson5414h ago

Man, you ever try to track it all in one account? I did that last year, swore I was on top of it. Then April hit and I was short like two grand because I'd dipped into it for "just one thing" a few times. Never again. That separate account is the only thing that works for my brain. Out of sight is truly out of mind.