The One-Person HR Department

So you’ve broken free from the corporate rat race. You’re a freelancer now, working from home. And the checks are already rolling in from your new clients. It’s what you’ve always wanted: financial independence.

But before you start spending that hard-earned money, remember that Uncle Sam still wants his piece.

There’s no HR department to automatically deduct Social Security and income taxes from your paycheck. No one to make contributions to your retirement plan. No one to make payments for health insurance coverage. Now you have to handle those things on your own. It can be tedious. But if you don’t do it, you’ll be scrambling for money that may not be there when tax time (which is quarterly, not annually, for freelancers) or payment-due dates roll around.

When you get a check from a client, first set aside money that will go into savings for future investment. “True wealth builders,” Michael Masterson says, “set aside money for savings well before they pay any bills. By making personal investing a priority, they force themselves to conserve where they need to conserve… in their discretionary spending.”

Once you’ve got your savings accounted for, do as novelist and freelance writer John Scalzi suggests: Cut your earnings in half. One half pays your bills, buys groceries, and covers other living expenses. The other half, which you put into a no-risk, interest-bearing account, will cover taxes, insurance payments, and your retirement plan.


Established in 2001, Early to Rise publishes information dedicated to helping you live your best possible life. Here you’ll find effective and proven strategies to increase your health, wealth and productivity.