How much runway do you need before going freelance?
Enough months of your real spending to get through a slow start. Many people aim for six. Count it in months rather than dollars, because spending drifts, and expect income to swing. In the Federal Reserve's 2025 survey, 58% of self-employed adults said their income varied from month to month, and 22% struggled to pay their bills in the prior year because their income varied.
If you spend $4,200 a month, six months is $25,200. The runway shrinks if spending rises while you save, even when the balance doesn't change. The figures are illustrative.
How much should you set aside for taxes?
More than your old paycheck would suggest, because nobody withholds it for you. Self-employment tax alone is 15.3%, 12.4% for Social Security and 2.9% for Medicare, on 92.35% of your net earnings, and income tax comes on top. You can deduct half of the self-employment tax.
The IRS expects estimated payments during the year if you'll owe $1,000 or more. For 2026 they were due April 15, June 15, and September 15, 2026, and January 15, 2027. You generally avoid a penalty by paying 90% of this year's tax, or 100% of last year's (110% if last year's AGI was over $150,000).
The Social Security part applies to earnings up to $184,500 in 2026.
What happens to your health insurance?
Losing job-based coverage opens a Special Enrollment Period on HealthCare.gov. You can sign up within 60 days after the coverage ends, or up to 60 days before. Price a plan before you give notice, because the premium comes out of the runway every month.
What Candor watches for
Candor reads the accounts every day and keeps a short list of what's worth talking through. For this goal, these are the ones that come up. Each card is filled from the records, and your agent sees it with the figures behind it.
Six months of runway: 3.9 months covered
The aim is 6 months by Jun 1.
Runway is counted in months of your real spending, not in dollars. If spending creeps up while you save, the same balance covers fewer months, and the date you can quit moves even though the savings didn't.
No paycheck from Brightline Studio yet
Expected around Aug 5. The last was $3,200 on Jul 6.
An employer pays on the same day every time, and clients don't. Candor learns when each one usually pays, so a late payment shows up days after it was due, not at the end of the month when rent is.
July income was $2,900
Usually about $6,100 a month.
Freelance income comes in waves, and one thin month is normal. The question is whether the runway can absorb it, which the next card answers.
Spending ran $1,250 a month over income
In June and July: income $2,950, spending $4,200.
This is what the runway is for. Two slow months drew $2,500 from it, which is fine while it lasts, as long as you can see it happening and know how many months are left.
Halverson Design stopped paying
About $1,800 monthly; nothing since May 28.
A retainer that quietly ends is easy to miss when other money is still arriving. It changes what you can count on every month from here.
Two months after going freelance: a check-in
No paycheck from Brightline Studio yet
Expected around Aug 5. The last was $3,200 on Jul 6.
Your agent
Brightline's August payment, about $3,200, was due around Aug 5 and hasn't arrived. Nothing is urgent: your savings still cover about four months. But July brought in $2,900 against a usual $6,100, and Halverson's retainer has stopped. Want me to draft a friendly note about the invoice? And I'd keep setting aside a quarter of each payment for taxes even while it's slow.
You
Draft the note, I'll send it. Keep the tax set-aside as it is.
This is an illustrative example. The decision stays yours, and so does any change at your bank. Candor is read-only and cannot move money. It saves the updated plan and the reason, so the next check-in starts from what you decided. Candor is not a licensed advisor and gives no advice.
Common questions
- How many people are self-employed?
- About 8.8 million Americans were self-employed in unincorporated businesses outside agriculture in September 2026, according to the Bureau of Labor Statistics. People who incorporate are counted as employees of their own companies, so the true number is higher.
- Does Candor do my taxes?
- No. Candor gives your agent your income and spending records, so it can help you estimate a set-aside and get ready for tax time. Filing and tax advice are for you and a tax professional.
- How much does Candor cost?
- Candor starts at $8.25 a month on the annual plan ($99 a year), or $14.99 month to month, and the first 7 days are free.
Sources
- Economic Well-Being of U.S. Households in 2025: Income and Expenses Federal Reserve, May 13, 2026
- Self-employment tax (Social Security and Medicare taxes) IRS, June 27, 2026
- Topic no. 554, Self-employment tax IRS, September 24, 2026
- Form 1040-ES (2026), Estimated Tax for Individuals IRS, February 12, 2026
- Contribution and Benefit Base Social Security Administration
- Special Enrollment Period HealthCare.gov
- Employment Situation, Table A-8 Bureau of Labor Statistics, October 2, 2026