Going Freelance? Here’s How You Should Plan Your CPF & Finances For 2023

Back when I started freelancing full-time in 2014, the only friends who were free to meet up with me at midnight were home tutors.

Fast forward to 2020 and it seems like everyone is a freelancer. The growing gig economy has been driven by greater demand for flexible work arrangements, disruptions caused by the pandemic, retrenchments, and so on.

The most obvious example is gig work like driving Grab or doing deliveries. But there are also more people ditching traditional office jobs after having had a taste of working from home during the pandemic. After all, if you’re going to sit alone at home in front of your computer all day, you might as well do it on your own terms.


Should I go freelance?
How to go freelance: Calculating your daily expenses
How to go freelance: Managing bills and invoices
How do I manage my finances as a freelancer?


1. Should I go freelance?

First of all, if you think becoming a freelancer is going to be the start of a rosy life where you spring out of bed in rapture every morning, don’t kid yourself. Every job has its dark side, and freelancing is no different.

Cons of freelance work

Freelancing has its fair share of downsides, of which the most well-known is the lack of a stable income and the need to hustle to find work.

You definitely won’t be getting a fixed paycheck every month, but the degree to which your income fluctuates depends greatly on your line of work and how established you are in your field. Some trades lend themselves better to long-term repeat clients, which can actually be quite stable.

The unpredictability and flexibility of your working schedule also varies depending on the nature of your work. For example, Grab drivers might be able to work at 3am if they want to. But some freelancers might be on contracts lasting several months, during which they have to go to their clients’ premises during scheduled office hours.

One clear downside is that unless you charge by the hour, you won’t get paid to just “show up” at work. You actually need to produce work to get paid, and having two hour lunches or watching YouTube on the sly will only waste time you could be using to earn money.

Pros of freelance work

As mentioned earlier, freelancers’ working situations can vary considerably depending on the job. Not every freelancer is a digital nomad or Grab driver.

But in general, freelancing gives you some degree of flexibility that can’t be had in a normal job. This includes flexibility  in terms of schedule, location, the freedom to choose your clients and projects, or being able to adjust your workload. Just be aware that this can vary, again, depending on your job.

Another potential advantage is that in many freelance jobs, the lack of a stable, permanent contract is sometimes compensated by higher hourly earnings. If you’re a software engineer, developer or social media manager, you could find yourself getting paid more for working the same number of hours as your in-house counterparts. Even freelance cleaners and nannies make more per hour than those hired by an agency.

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2. How to go freelance: Calculating your daily expenses

Before diving into freelancing full time, you should know the bare minimum you must earn in order to make ends meet. In other words, you need to know how much money you spend.

This doesn’t mean you can get away with just some guesstimation work. To get a more accurate picture of your expenditure, look at your past credit card bills and bank account statements.

Here are some expenses to consider:

Loans—Repayment of home loan, car loan, etc.
Insurance—Health insurance, life insurance, car insurance, etc.
Children’s needs—School fees, tuition fees, etc.
AccommodationElectricity bills, water bills, rent (if renting), town council fees, condo management fees, etc.
Food—Grocery and hawker/restaurant expenses (Pro tip: Use a food reward app or dining credit card to save!)
Transport—Public transport fares, ride-hailing fares, petrol
Other recurring expenses/subscriptions—Netflix, Spotify, gym, etc.
Discretionary expenses—Entertainment, holidays

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3. How to go freelance: Managing bills and invoices

If you identify as a “freelancer” rather than a “CEO”, you’re probably not blessed with a secretary. You are your own secretary, and you’re going to be handling all billing and invoicing yourself.

Stay on top of this by setting a fixed date to do all your invoicing and chasing for completion/payment. This can be on a  weekly, bi-weekly or monthly basis.

You should set a clear deadline for payment on your invoices and keep track of clients’ payment dates. Once the deadline has passed, you can start chasing those who haven’t paid up.

Finally, take note of which clients always pay late, require a lot of chasing or let projects drag on and on. You can either drop these blacklisted clients once you have the bandwidth to pick and choose, or raise your fees to the point where you are still willing to work for them.

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4. How do I manage my finances as a freelancer?

1) Set up a new ‘business’ bank account

In almost 8 years of freelancing, one thing I’ve learnt is that clients never ever follow instructions to indicate the invoice number when making bank transfers, resulting in a cluster of unlabelled transfers.

Confine this chaos to a smaller sphere by setting up a separate bank account for your earnings. It just makes record-keeping a bit easier and less messy. You can just open a second account at the same bank as your regular savings account so you don’t need to deal with different online banking passwords.

2) Set up standing orders for all your insurance + bill payments

As a freelancer, you’ll want to keep all the unnecessary admin to a minimum. So, I highly recommend that you set up standing orders to have all your insurance, credit card bill and other bill payments made automatically by GIRO or credit card.

ALSO READ5 Things Singaporeans Can Automate to Make Their Lives Easier

This has 2 main advantages. First, you’re freed from having to waste time manually monitoring deadlines and paying these bills. Secondly, it also forces you to prioritise paying bills instead of overspending and rolling over a balance, or being charged late fees.

3) Income tax

You need to pay income tax whether or not you have registered with the Accounting and Corporate Regulatory Authority (ACRA) as a sole proprietor or some other business structure.

Tax filing (note: tax filing, not paying!) is compulsory if you earned more than $6,000 in a year. However, you only need to pay income tax if you earn more than $20,000 in a year.

IRAS will send you a yearly alert to file your taxes when tax season roles around. This is fairly straightforward, you usually just need to declare your income for the year and IRAS will work out the amount of tax to pay in your tax bill.

ALSO READ: 10 Ways to Reduce Your Personal Income Tax in Singapore for YA 2024


4) CPF contributions

Contributions to your Ordinary Account (OA) and Special Account (SA) are not compulsory for freelancers. However, you will need to make a compulsory annual contribution to your MediSave Account after filing your taxes each year as long as you have made more than $6,000.

CPF will send you a letter indicating the amount to transfer to MediSave. If you find paying a lump sum every year too intimidating, you can sign up for the CPF Board’s Contribute-As-You-Earn (CAYE) scheme.

So, should you make voluntary contributions to your OA and/or SA? Depends on your financial discipline. If you already have a well-thought out investment portfolio and have decided that CPF will not be part of the picture, then you don’t have to.

On the other hand, if you’re just letting your money sit in the bank, consider making a voluntary transfer to CPF. Why? Unlike savings account interest rates, CPF interest rates are actually good.

If you’re doing it solely for retirement income, you can contribute to your SA (or RA) through the Retirement Sum Topping Up Scheme and also enjoy the added bonus of tax relief.

If you wish to top up your OA, you must top up all three accounts at the same time or make monthly CPF contributions via GIRO. The CPF Board will divide contributions based on these ratios:


OA (ratio of contribution)

SA (ratio of contribution)

MediSave (ratio of contribution)

35 and below




Above 35 to 45




Above 45 to 50




Above 50 to 55




Above 55 to 60




Above 60 to 65




Above 65 to 70




Above 70




Source: CPF allocation rates as of 1 Jan 2023

The annual limit for combined CPF contributions (including compulsory MediSave) is $37,740.

5) Savings & fixed deposit accounts

As a freelancer with a variable income, you’ll need a bigger emergency fund on hand for unexpected expenses.

So, it makes sense to plonk your non-invested cash savings in a high interest savings account or fixed deposits. Here are our recommendations:

Best savings accounts for freelancers:

HSBC Everyday Global Account (Personal Banking)—Multi-currency account which supports foreign clients and other currencies. Great if you’re an expat or have clients paying in different currencies
CIMB FastSaver—Get a decent interest rate of 3.50% p.a. without any salary credit.
UOB One—Currently one of the highest interest rates in town without requiring you to credit your salary: 4.0% p.a.
Standard Chartered Bonus Saver account—You can get an interest rate of as high as 5.38% p.a. without salary credit, but you will need to fulfil 4 requirements: spend on your credit card, pay 3 bills, invest, and buy insurance.

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Found this article useful? Share this with friends and family who are thinking of going freelance!

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