Started putting 30% of every check in a separate account for taxes, and it changed my whole year

For my first two years freelancing, I'd just guess at my tax bill and get a nasty surprise every April. This January, I opened a new checking account and set up an auto-transfer for 30% of every single payment that hits my main account. Over the last quarter, I've already got over $4,200 sitting there, ready for the IRS. It doesn't feel like my money anymore, so I don't spend it. Has anyone found a different percentage that works better for them, or a different system?

3 comments

3 Comments

henderson.wesley14d ago

Honestly thought that was overkill until I tried it... now I just see it as paying a bill early. That separate account really does trick your brain. Might bump it to 35% next year just to be safe.

ray36314d ago

The envelope system worked like that for me too.

nancyw9715h ago

My brain needs all the tricks it can get. I set up a separate savings account and still managed to forget it existed for three months. Felt like finding money in a winter coat, but also a little pathetic. Your plan to bump the percentage is smart, way smarter than my system of just hoping for the best.