How To Set Financial Goals: Guide For Freelancers & Agencies

What is the best personal budget for freelancers or small agency owners?

It’s hard to answer that question, partly because of how vague it is. When it comes to finances – both personal and business – there’s no one-size-fits-all budget. You have to consider your short-term and long-term financial goals.

But even that raises another question! How do you go about goal setting in the first place?

In this guide, I’ll help you choose financial goals that you want to pursue. That way, you can make a budget that is tailored to your specific financial needs.

Financial planning is not just about numbers. On a deeper level, what you’re trying to do is line up your business objectives and your personal aspirations.

Do you want more clients? Are you concerned you don’t have enough set aside for emergencies? Or do you simply want more time off?

These are the sorts of questions you’ll want to ask yourself. In this post, I’ll provide a list of financial goal ideas for you to pick and choose from. Don’t try to pursue them all at once! Just pick a few that work for you so you can stay focused.

Quick Note: As with my other posts, my assumption in writing this is that you’re in the US, running a freelance or small agency operation. You’re probably a sole proprietor or single-member LLC. The vast majority of this will still apply even if that doesn’t describe you.

How To Choose Financial Goals That Work For You

Choosing the right financial goals is deeply personal, especially when you’re running a small business. So before we talk about specific goals you can pursue, it’s helpful to break financial goals into three categories:

  1. Growth goals, such as winning new clients or increasing revenues. This means prioritizing the financial growth of the business.
  2. Security goals, such as building an emergency fund or saving for retirement. These goals are all about making sure that both your household and your business are prepared for the inevitable shocks of life.
  3. Lifestyle goals, such as working less or traveling more. Goals in this category are all about finding positive reasons to care about money management.

In all likelihood, your goals will consist of some combination of these three categories. No matter what you choose to make a priority, though, remember – set SMART goals. That means specific, measurable, achievable, relevant, and time-bound. This is classic advice for a good reason – it helps you know if you’re truly succeeding or not.

16 Goal Ideas To Help You Get Started

Everyone’s goals are different. Some people want to prioritize growth, others are more concerned about improving their lifestyle. You’ll probably focus on different goals at different stages of your life.

Below, you will find a list of common financial goals that business owners choose to pursue. Pick just 3 or 4 that speak to you personally and pursue them with clear-headed focus.

1. Set a budget.

If you don’t have a budget, you need to make one. Having a budget will help you control your finances by tracking income and expenses.

Budgets let you allocate funds for essential needs, business growth, and savings. Sticking to a budget can prevent overspending and ensure you have enough for unexpected costs.

Basically, budgets keep you honest.

Easy Step 1: Read our guide on how to make a budget.

2. Build an emergency fund.

Cars fall apart. Houses need repairs. Hospital visits happen.

You need an emergency fund to cover unexpected expenses, like medical bills or equipment repairs. This is true for both your personal and your business expenses.

If you’re not sure where to start, try to save up at least 90 days of cash on hand to cover business expenses. Then make sure you can cover at least three months’ of personal expenses out of your savings.

This will give you a much-needed safety net, which goes a long way toward reducing stress during tough times.

Easy Step 1: Start saving a small amount each month, ideally with automated bank transfers into a savings account.

3. Set and meet monthly revenue targets.

When you first start budgeting and your cash flows are uneven, it’s tempting to only focus on budgeting for expenses. And when you’re getting started, that’s actually perfectly OK.

Once your business starts to fall into predictable rhythms, it’s a good idea to set revenue targets on a monthly basis. That way, you can make sure you are making enough money and take action if you find that you are not.

Easy Step 1: Analyze past revenue and set realistic targets.

4. Track expenses accurately.

Tracking business expenses is necessary for budgeting, taxes, and creating accurate financial statements.

It’s also a massive pain in the neck and can be easy to procrastinate on. But you need to avoid the temptation!

Set aside some time on a regular basis, perhaps weekly, to review all your expenses and properly categorize them. You’ll be glad you did.

Easy Step 1: Read our guide on how to track business expenses.

5. Increase profit margins.

Profit is what actually matters when it comes to business finances. Revenue, taken out of context, is a vanity number.

Plain and simple, increasing profit margins boosts your business’s profitability. The way you do that is to make sure you generate more revenue while keeping expenses flat.

There are a number of ways you can do this, including upselling existing clients and raising your rates. You might also consider offering high-value services that command higher prices.

Another way is through cutting unnecessary expenses. Just be aware that you will probably hit the limit on how much you can cut expenses before you hit the limit of how much you can raise in revenues.

Easy Step 1: Review your pricing strategy and make sure you aren’t undercharging.

6. Set aside money for retirement.

Saving for retirement is crucial for your personal long-term financial security. Compound interest is the closest thing in real life to magic. Even small, regular contributions can grow significantly over time.

Use retirement accounts like SEP IRAs or Solo 401(k)s to reduce your taxable income and earn compound interest.

Easy Step 1: Open a retirement savings account.

7. Automate your financial processes.

If you’re tracking your business expenses by hand or in a spreadsheet, consider spending money on some software instead. QuickBooks, Freshbooks, and Xero are all good options for managing your business finances. This can help you categorize expenses and make financial statements faster and more accurately.

It would also be a good idea to set up autopay for your bills and automatic transfers for savings, owner’s pay, and investing. The less you have to do by hand, the better!

Easy Step 1: Find and start using an online financial management tool.

8. Set aside money for taxes.

Freelancers and agencies have to manage their own taxes. No one is doing the withholding for you like a traditional job.

Be sure to set aside a portion of your income for tax payments and put it into a savings account for quarterly and/or annual payments. That way you won’t end up paying huge, shocking sums out of your checking account.

Easy Step 1: Calculate your taxable income.

9. Pay back debts.

Nothing can drag your finances down quite like debt. Paying it off will help your overall financial health, and especially your credit score.

If you choose to do this, be sure to prioritize high-interest debts so you eliminate excess interest first.

Easy Step 1: Make extra payments on high-interest debt.

10. Diversify your client base.

It’s dangerous to draw too much income from a single source. Having a diverse client base reduces risk and makes it easier to keep a steady income. Target different industries and client types to spread out your financial risk.

Easy Step 1: Win a new client.

11. Build passive income.

Passive income is often cited as one of the primary reasons to start a business. With many freelance and agency operations, though, much of the income is made by trading time for money. This isn’t necessarily bad, but it’s not passive income.

Even having a small amount of passive income can change your life for the better. You can do this through means like real estate or stocks, or alternatively, low-maintenance businesses.

Don’t think all-or-nothing here. If you don’t have passive income, find a way you can make $100 per month first.

Easy Step 1: Consider dividend stocks.

12. Get into the habit of regular financial reviews.

Regular financial reviews help you stay on top of your finances. This is as simple as it sounds – review your income, expenses, and financial goals monthly. This practice can identify potential issues early and keep your financial plans on track.

Easy Step 1: Schedule monthly financial review sessions.

13. Find ways to reduce your taxable income.

Smart tax planning can reduce your taxable income without changing your lifestyle for the worse. One simple example is that putting aside money into certain types of retirement accounts directly reduces your taxable income. You may also be able to deduct more expenses than you are aware of.

Speaking with a tax professional is the best way to optimize for low taxes. It costs extra, but it’s almost always worth it.

Easy Step 1: Find a tax accountant.

14. Set up a safety net with insurance.

Insurance is not a flashy subject, but it’s so important. The right insurance coverage can protect you from all kinds of awful events. Consider health, liability, and business interruption insurance at a minimum. These policies can provide crucial support in emergencies, safeguarding your financial stability.

Easy Step 1: Get life insurance.

15. Make enough to hire help.

When you start a freelance or agency operation, it’s way too easy to get stuck in a rut where you can never take time off. Hiring help can fix this problem, and increase your productivity and business growth.

Aim to generate sufficient revenue to afford hiring staff or freelancers. This allows you to focus on higher-level tasks and scale your business effectively.

Easy Step 1: Calculate the cost of potential hires.

16. Set up a business that still runs, even when you take time off.

Creating a self-sustaining business ensures it operates smoothly without your constant presence. Develop efficient systems and delegate responsibilities.

Do this and you can achieve a work-life balance that often eludes freelancers and agency owners, all while ensuring continuous business operations.

Easy Step 1: Document and standardize one common business process.

Final Thoughts

Setting and achieving financial goals is essential for the stability and growth of your freelance or small agency business. You can have different types of goals, some for business growth, others for security, and still others for your lifestyle.

To be a proactive money manager, the first step is to pick a handful of goals that are worth your focus. Then you can get a little more specific in your goal-setting so you can track and measure your success.

With time, dedication, and discipline, you can reach your financial goals. I hope this guide helps you choose goals worth pursuing!

Frequently Asked Questions

Scroll to Top