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How to Budget for Vacation, Holidays & Sick Time Off as a Freelancer

Choosing your own hours, working from home, and choosing the projects and clients you take on sounds like a dream, doesn’t it? While freelancing comes with all of these benefits and more, it isn’t always everything it’s cracked up to be.

Freelance work can give you more day-to-day freedom than traditional full-time employment, but it does come with its own challenges. Not least of which is budgeting for personal time off like sick days and vacations. And although taking time away from the office can be difficult as a freelancer, it is possible with a little forethought and planning.

Here are some of the ways you can budget for vacation time and sick leave when you’re self-employed so that you can have a healthier work-life balance.

Ways Freelancers Can Save For Vacation and Sick Time

There are two main factors that make booking time off as a freelancer particularly difficult: client obligations and budgetary restrictions. It can be difficult to balance both, but it’s essential to take time off to care for your physical and mental health.

Scheduling time off outside of your priorities and notifying clients is up to you, but when it comes to budgeting for leave, you have a number of different options.

1. Include Vacation and Sick Pay in Your Rate

Ideally, you factored in all your costs when calculating your freelance rate, including taxes, retirement savings, and expenses like professional subscriptions and tools. If you’ve already accounted for personal time off in your hourly rate, you’re ahead of the game.

But, if you’re like many freelancers, covering time off for yourself may have slipped your mind when setting your rate. Luckily, that can be easily remedied by adjusting your rate for future projects and new clients.

To start, figure out how many weeks you want to take off each year and throw in a few extra days to account for illnesses, appointments, and emergencies. Remember to consider whether you plan to work or relax on bank holidays as well because that will cut down on your total working days per year.

Depending on how much time you want to take off and how many hours you work each month, you can calculate the additional amount you need to add to your rate.

In a full-time position with an allotted two weeks of vacation a year, about 4% of an employee’s salary is set aside for time off.

As a freelancer, you may have fewer billable hours overall but charge a higher rate than a typical worker, so the amount you set aside will vary greatly depending on how you charge, how much you work, and how much vacation you want to take each year.

2. Set Aside a Portion of Every Invoice

If you don’t have straightforward billing, or your income and hours vary significantly from month to month, including a calculation for time off in your rate may not work for you. Instead, consider setting aside a portion of each invoice in a separate account.

For example, after your living expenses and bills have been covered, you could set aside 50% of any leftover cash to go toward vacation days and sick time. This is an ideal option for freelancers who can’t always predict how much they’ll have coming in or who bill differently based on the project or client.

If saving for a vacation is a priority and you’re not putting away money for other expenses or to pay off debt, you can also set aside the entire amount you have leftover each month.

First, figure out the entire cost of the vacation you want to take, including time off, flights, accommodations, meals, and activities. Once you have a number to work toward, you’ll know how much you need to aim for with your vacation fund.

3. Take on Additional Clients and Projects

If your current monthly income just covers your bills and living expenses, you probably won’t be able to shave a portion off each invoice for time off. But that doesn’t necessarily mean you have to suffer through burnout and give up on a chance to get away from your desk.

If you have a specific vacation in mind, or you just want to save up some extra cash for sick days, take on some additional clients and projects to build up a personal time off fund.

While every freelancer likes to have long-term, committed clients, taking on short-term projects every so often can help you to increase your income and top off your savings to cover vacation days and sick leave.

Set aside the income you receive from these clients in a separate savings account and let it build up over time. Use it as a rainy day fund for personal emergencies or plan a getaway to relax and unwind.

4. Take a Working Vacation

If you’re a new freelancer and your bank account just can’t handle supporting a vacation or sick day, you might have to compromise by taking a working vacation. Fortunately, you don’t necessarily have to spend the entire time working. If possible, consider committing to consistent but cut-down work hours while you’re away.

For example, some freelancers continue to work two to four hours per day while on vacation, waking up early or carving time out of their evenings to meet deadlines and keep their workload balanced.

If you still need to put in a full workday, getting away from your routine and home office might be enough to make a working vacation worth it. After all, as a freelancer, you can probably do your job from just about anywhere as long as you have a solid Wi-Fi connection and your laptop.

The same goes for a sick day. If you can’t afford to take a full day off, try working on what you can from the couch or bed and allowing yourself to have a few additional hours of rest when you feel the worst.

5. Work Overtime

Another option you have is to work overtime prior to taking time off. While that might mean pulling a few all-nighters and working longer hours, it will allow you to get any pressing client work taken care of before you leave the office. Then, you can enjoy your time out of the office without having to worry about deadlines, poor Internet connections, or responding to emails.

Plus, unlike some of the other options you have, it won’t negatively affect your personal finances because you’ll be doing the same amount of work you normally would.

6. Book Time Off During Holidays and Slow Periods

Many businesses have annual slow periods caused by seasonality. Booking your time off around holidays and slow periods when you wouldn’t have a lot of work anyway can give you a chance to take a break without it significantly impacting your annual income.

Plus, it’s unlikely to make much difference to your clients because they’ll either be taking time off themselves or experiencing an expected lull in typical operations too.

For example, many businesses slow down over the winter holidays and around bank holidays depending on their industry, so those can be ideal times for you to take a breather as well. If you expect your freelance business to be slow for a brief period — and you’re financially prepared for it — use it as an opportunity to take some time off.

7. Start a Personal Time Off Fund

If you’re a new freelance business owner, time off may not even be on your radar. But eventually, you’re going to need a day off to take a mental health break or to recover from a particularly nasty cold. When that time comes, you don’t want to have to worry about whether you’ve missed out on income.

That’s where having a time off fund can come in handy. Contribute to it in whichever way works for you — monthly, per invoice, or even sporadically — and let it build up until you need to use it. This way, when you do eventually have a vacation in mind, you’ll already have a headstart on making up for any potentially missed wages.

8. Start a Side Gig

If freelancing is your full-time job, you might balk at the thought of starting a side gig. But part-time endeavors can help you to earn additional income, which you can then put toward personal time off.

For example, you could set up an account on a freelance website like Fiverr or Upwork, or you could do something completely outside of the services you offer as an independent contractor, like drive for Uber, walk dogs in your neighborhood, or rent part of your living space on Airbnb.

Any money you generate from your side gig can be used to cover time off while still supporting the flexibility and autonomy of your self-employment.

9. Subcontract Work Out

If you have an emergency that requires you to take time off, it can be challenging to ensure that your deadlines are met and responsibilities fulfilled. And completely missing out on the income you were planning for can throw a wrench in your budget.

In these circumstances, subcontracting your work out to another trusted professional can ensure your clients still receive the deliverables they expect and you still get a paycheck, even if you have to turn a portion of it over to the subcontractor.

Although most freelancers don’t have a full-time employee on call to take on projects when you need to take time off, growing your network will help you to find professionals with similar skill sets to step in and handle a project when you aren’t able to.

For example, you could hire someone to handle a few social media posts on LinkedIn for a client while you’re away or to finish up the last graphic for a small business’s advertising project.

As an added bonus, subcontracting between complementary professionals can become a two-way street. By growing a reliable subcontracting network, you may be given referrals or opportunities to take on additional work or clients in the future, potentially adding to your income and client roster.


Final Word

When you own a freelance business, a lot of responsibility falls on your shoulders, from health insurance and contributing to a retirement account to budgeting for vacation time and sick leave. However, most freelancers will tell you that the perks outweigh the pitfalls, as long as you plan ahead and set yourself up for success.

Paid time off isn’t out of reach if you’re self-employed — it just requires careful budgeting, preplanning, and some creative thinking to make it a reality. Consider how you’d like to handle personal time off before you need it so you aren’t left scrambling to cover your expenses and stressing out over whether you can afford to take a sick day.

Brittany Foster
Brittany Foster is a professional writer with a background in contract law, real estate, and content marketing living in Nova Scotia, Canada. When she's not at her desk you can find her in the woods, on the couch, or behind a camera.

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