This is the second in a four-part guide to freelancer finances. From day-to-day cashflow management to thinking bigger and smarter about your money, it covers everything a freelancer needs to know to get on top of your finances.
This is part two of the guide, a plan for shifting your mindset around money. Part one of the guide was about financial freedom.
Money is the root of all freelancer worry. From getting paid on time and asking for more, to learning how to manage your own finances, most of the biggest issues freelancers face come down to their pay.
Some of the problems, like a lack of sick pay and insufficient payment protections, are systemic. That’s not to say, however, there’s nothing freelancers can do to improve their personal situations. Big change needs to happen at a cultural and policy level, and I do believe it will, but in the meantime here are some things to think about to improve your money mindset
The aim of this guide is to give you a starting point for thinking differently about your money as a freelancer. The following sections are prompts to tackle some of the most common money mindsets that freelancers have. At the end, I’ve put together some resources so you can start building a money mindset toolkit.
What’s your money shame?
We all have ingrained beliefs about money, many of which are toxic and hold us back. How you think about money has a lot to do with your family, upbringing and how money was (or wasn’t) talked about in your home. I think that everyone has a money shame – a sticking point when it comes to money that they grapple with and don’t feel comfortable talking about. It might be growing up in a household where money was scarce, or it could be ongoing financial support from family or a spouse.
Figuring out and then confronting your money shame is a very worthwhile exercise. You can start by writing out your “money autobiography”. Start from your earliest memory of money, perhaps your parents bought you a piggy bank or maybe you knew that your family’s finances weren’t stable. From there, just start piecing together your money narrative and all the different roles money has played in your life. This will help you understand how you’ve formed beliefs, attitudes and worries around it. From there you can start to make any necessary changes. As I wrote in part one of this guide, financial freedom has nothing to do with how rich you are and everything to do with the role money plays in your life.
Find a safe space to talk about money
Getting comfortable talking about money is important for everyone, but I think especially so for freelancers. Running your own business and working for yourself means thinking and talking about money on a daily basis. The more comfortable you are talking about money in other aspects of your life, the easier it will be in your professional life.
The conversations we have with friends and family about money are some of the hardest. Shame is silencing and not enough of us are talking about our money worries. You’re more likely to tell a friend about an embarrassing intimate experience than share that your mounting debt is keeping you up at night. But talking about things that you find shameful is frees you from them.
A great place to start is with a trusted friend. If you start opening up to them about your own money worries, or even just talking candidly about how you view money, you’ll be surprised where the conversation might take you. And if you can start opening up to those around you about money, negotiating that next project fee will be a walk in the park.
Stop pricing your time
In the third season of Stranger Things, there’s a scene of sassy Erica negotiating the terms of her crawling through the air vent to help Dustin and the gang investigate a suspected Russian spy operation. The teenagers want Erica to help them out of sheer patriotism, while she wants them to pay her in a life-time supply of ice-cream.
“This is a free market system, people get paid for their services depending on how valuable their contributions are,” explains. “And it seems to me, my ability to fit into that little vent is very, very valuable.”
Regardless of what you might think of the failings of capitalism, this is a great lesson in pricing your services. Because you might literally sell your time as a freelancer, but you need to stop thinking about your time as money. While it might be necessary to give a client a day rate, avoid internalising the idea that your days are worth X amount of money, because it really muddies your value as a freelancer. When all you can think about is your time being money, you start to think that you’re disposable and that any moment you’re not working is money lost. (Hence why we don’t take enough time off).
A client pays you to do a project not because of how long it takes you, but because of the value you bring and how that is reflected in your output. Erica got the teenagers to agree to pay her asking price not because of the time it took it crawl through that air vent, but because she was the only one who could do it at the precise moment they needed it.
You’re not a sell-out if you do commercial work
While we’re on the subject of capitalism, one thing many of us struggle with is balancing journalism with commercial work. In fact, I would posit that a big money shame freelancers develop is worrying that they’re selling out.
It’s very hard to make a decent living just from journalism (or any creative pursuit). Not to mention, it’s not all that sustainable. The media industry is volatile and the smartest freelance businesses are diverse ones; having multiple streams of revenue makes good financial sense. However, when those revenue streams involve commercial work in the form of content marketing, writing copy for brands or even monetising your social media, it can feel like you’re selling out.
This will sound backwards, but worrying about being a sell-out can actually be a good thing. Being conscious of the choices you make in your business will keep you on the straight narrow. Some commercial deals, or the terms and expectations of clients, can compromise your ethics as a journalist so it’s important to develop guidelines for how and when to take on this work.
Not taking on any commercial work explicitly for moral reasons, however, often only results in you being broke and the system still not changing. It’s important to ask yourself where your idea of selling out came from, or who specifically is throwing those kinds of accusations around. In my experience, it’s usually people in privileged positions who have little to no understanding of the realities of their own industry.
I don’t believe in selling out. First of all, my landlord doesn’t take morals in lieu of rent. But more importantly, I think while we work towards fixing the system (#FairPayForFreelancers), we can find ethical and sustainable ways to exist within it while it’s still broken.
Your income isn’t irregular, it’s flowing
A big challenge with freelancing is dealing with the irregularity of your income. This is especially true if you come to self-employment after working on staff. You’ll be used to getting a paycheque for a fixed amount each month and maybe you were a master budgeter, but now have no idea how to handle your finances.
A really simple and effective way of dealing with a fluctuating income is to stop comparing like-for-like what you make as a freelance to a fixed staff income. You don’t have an irregular income, it’s called cash flow. At its simplest, cash flow is the money flowing in and out of your business and the objective is to make sure that more is coming in than going out.
As a freelancer, you’re the boss and the employee at the same time. The boss half of you has to do things to make the employee half of you happy. Cash flow is a prime example. Rather than thinking that you’re not getting paid a regular wage, think about the steps you, as the boss, can take to make sure your cash flow is in good shape.
(NB: In the next part of the guide I have practical tips for managing cash flow)
Build your money toolkit
Something we often forget about personal finance is that it’s, well, personal. There’s so much information out there about money that the problem isn’t a lack of resources but rather finding the ones that resonate with you. There are lots of different ways to manage your money and different schools of thought regarding building wealth. And as we’ve established, all of us carry beliefs and shame around money unique to us.
Rather than hunting for a blueprint on money management, I encourage you to find a source of information that sits comfortably with you. The FIRE movement might speak to some people, others may be interested to explore money and manifesting, whereas you might be drawn to more traditional budgeting and investment routes. If you find a source for financial advice that makes sense for you, it’s more likely you’ll follow it.
The following are books, websites and resources I use and like. Use them as a starting point to develop your own money toolkit:
The Financial Diet (YouTube channel with actionable money tips)
Go Fund Yourself (Instagram account with easy personal finance advice)
Open Up: The power of talking about money (Book by Alex Holder)
Money: A users’ guide (Book by Laura Whately)
Vestpod (Newsletter and events for women about getting started in investing)
FT Money (The weekend supplement in the FT often has straight-talking advice)
My Frugal Year (Anonymous Instagram account about debt)
Better Have My Money (Newsletter about stocks and shares)
Young Money (Blog by Iona Bain)