One of the most empowering things about freelancing is that it enables you to work flexible hours, take frequent vacations, or even work on the road while exploring new places.

However, when you’re a full-time freelancer, you will encounter high-highs and low-lows. Some weeks you will be completely swamped, working 60+ hours, and other weeks you will struggle to make ends meet. The best way to prepare for the instability of freelancing, and to truly enjoy your freelance lifestyle is to figure out and grow your runway.

In this blog post, I’ll share three reasons why you should know your runway and some simple steps toward figuring out where you stand. By the end of this post, you’ll have an estimate on how long you can live without new income — and you’ll have a solid foundation of how to think about runway in the future, so you can start growing it.

A lot of freelancers don’t think of their work as a business or career, but it’s both!

Before we dive in, I think it’s worth taking a moment to talk about what it means to be a freelancer.

At its core, freelancing really just means running a small service-based business. When a client needs help performing a task or creating value in a way where they do not possess the resources or skills necessary to do it on their own — they come to you. You offer them your skills and expertise in exchange for money (or trade! - if you’re into that)

But at the end of the day, YOU are YOUR business.

Your clients will give you projects that keep the lights on, but they are not your business, and they are not your boss.

You have the freedom to schedule projects in a way that works for you. You have the freedom to learn new skills and grow your personal potential and value. You have the freedom to take your career in any direction that makes you happy.

Knowing your runway will help you take advantage of these freedoms, and enable you to take the time and space you need to grow your career with long-term success and stability in mind.

Alright, enough fluff, let’s get back to those numbers!

Your runway is the number of months you can pay yourself a consistent salary without making any additional income.

Your runway is the number of months you can pay yourself a consistent salary without making any additional income.

Cool, but why should I calculate it?

Here are three reasons why you should calculate your runway.

  1. Work-life-balance

    Remember that time you took on an extra client that pushed your weekly hour count to 60hrs? Then, that snowballed to another client, and now your typical work week is 60hrs. If you knew you had six months of runway, you would have felt more comfortable declining that additional client, and you could have spent all of that extra time doing things that you actually enjoy.

  2. Knowing when to find new clients

    When your biggest client runs out of money or work, and you have six months of runway, it could be the perfect time to invest in learning new skills to improve your career trajectory, or taking that much-needed vacation to recharge your batteries.

  3. Dropping clients that aren’t the right fit

    One of my biggest struggles as a freelancer has been dealing with the stress that comes from working with clients who are not a good fit. Sometimes it’s alright, but other times they can be mean, or downright abusive. If you have six months of runway, you can live without them. Save yourself from the stress by firing them or decline a new project that doesn’t align with your personal or career goals. Instead, you can spend your new-found time looking for clients who are a great fit and align with the values that matter to you.

I’m convinced, now how do I calculate this magical number?

To calculate your runway, you’ll need to know three numbers. Your bank account balance, an estimate of your monthly business expenses, and your ideal monthly salary. I cover these things in more detail below.

  1. Your bank account balance after taxes. We’ll dive deeper into taxes as a freelancer in future posts, but for now, let’s assume that ~32% of your income will go to taxes. (The 32% tax rate is a generic estimate for US federal taxes. If you live in a different country, plug in your region’s tax rate here.)
  2. Your estimated monthly business expenses. Some freelancers will have a set number of expenses every month, while others may vary. Expenses include things like office space, supplies, software subscriptions, car mileage, etc. A rough estimate is fine, but I suggest being conservative by overestimating your monthly business expenses to account for unexpected purchases.
  3. Your desired monthly salary. A monthly salary may be a new way of thinking for some of you. To calculate your runway, you need to decide what your monthly salary is. This number is the amount of money you need to pay yourself every month, to live the lifestyle you would like to have. Take a minute to evaluate your personal monthly expenses to figure out what this number needs to be.

Almost there! Now that you have all of the numbers you need, it’s time to calculate your runway. You can use our free runway calculator, which will provide you with advice depending on your results, or you can calculate your runway on your own! If you want to calculate things on your own, you can use the formula below.

Bank Account Balance / (Monthly Salary + Monthly Expenses) = Runway

Step 1 of 4

What is your bank account balance?

How much money is in your bank account after taxes have been taken out?


Disclaimer: This tool should not be considered financial or tax advice. If you need advice, please seek the help of a certified professional.

Congrats on taking this first step! Now that you have an idea of how long your runway is; take some time to reflect on your personal and business goals. Are you in the position to take time off? Could you spend the next few weeks investing in yourself by learning new skills?

Anyone can live the freelance lifestyle — working for yourself with flexible hours, taking frequent vacations, working on the road. All it takes is a little bit of business mindset to put things into perspective and to allow you to set yourself up for success and happiness.

If you’re interested in using more tools like our free runway calculator, or you just want a weekly email full of links and articles that help you grow as a freelancer, sign up for our mailing list below.

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By Jessica Gillis

Freelance UX/UI Product Designer & Founder of Hammock