The Brutally Honest Truth About Money Management as a Freelancer

There was this freelancer. She had just spent Friday of the March Break in the big city with her 14-year-old daughter. They were about to head home and were at Starbucks buying their for-the-road drinks for the two-hour drive.

And her bank card didn’t work.

Probably some glitch or something. She used her credit card, paid for their drinks, and they went on their way. Saturday morning came and she walked to the drug store. She got to the cash register to pay for her purchase and you guessed it…

Her bank card didn’t work.

Now, there was a niggling. Something deep down inside that was telling her this wasn’t just some glitch. She left her purchase on the drug store counter and went home to call the bank.

You see, this woman had struggled with money off and on her whole life. And she had been on her own as a single mother for 13 years. She didn’t even make $10K in one of her early years as a freelancer.

Over those early years, she had her share of debt trails and being late with the rent. But she had gotten it together. Things were good. She lived in a nice rental home in a good neighbourhood.

But this past year had been a bit of a struggle. Too much on her financial plate. She let her tax payments slide. Worse, she had ignored those brown envelopes that come from the government.

And now she was paying the price.

You’ve probably guessed by now that this woman is me. And while most of you perhaps haven’t gotten yourself into deep doo doo with the government over your taxes, chances are there are many of you out there having a really rough time with money.

You are not alone.

Now, truth be told, things are pretty good in terms of money for me. I make a decent living these days and it gets better every year. But my expenses are also high and I didn’t grow up learning how to manage money AT ALL. I’m learning the hard way.

It has taken me three months to bounce back from having my bank account frozen by the government. And I take FULL responsibility for my situation. It’s not something I planned to have happen and it’s not something I wanted to have happen. Yet, I got myself into it, and I damn well got myself out of it.

That complete and utter lack of control over what was happening, over my money, was a total wake-up call for me. I will NEVER EVER feel that helpless again.

I know as freelancers and entrepreneurs we all hear about how we need to manage our money well, even better than employed people. Make sure you put away savings. Make sure you put away money for taxes. Make sure you have a cushion for those months that don’t cough up enough work to pay the bills.

But seeing that written in an article on Forbes and hearing about someone’s actual real-life experience when they don’t do these things are totally different.

An article with facts is just too sterile, too detached. It’s only when we talk about our own experiences, the good and the bad, that we learn from each other and can help each other. It’s only when we do this that we remove the stigma and learn that we aren’t alone, that we all make mistakes, and that we can move on to a better life.

Which is why I am sharing this with you.

You are not alone.

Whether it’s the mound of debt you’re under, living off credit cards while you struggle to find more work that pays decently, the back taxes you owe in spades, or the thrift store winter coats you’re buying for your kids, the fact is there are people — freelancers — out there struggling with money.

After all, in the U.S., a whopping 60% of people do not have enough money in their savings to cover a $1,000 emergency expense. That’s nearly two-thirds of Americans!

In Canada, the average household savings rate (the amount of disposable income saved) is a mere 0.8%. Based on an average monthly disposable income of $2,273, that’s about $22 a month in savings. At that rate, it’ll take nearly 4 years to save up $1,000.

And those figures include people who work for an employer and get a regular paycheck!

As a freelancer, you don’t get a regular paycheck. You need not just a regular savings buffer, but also an I-didn’t-make-as-much-money-this-month buffer.

Listen, I’m lucky I’m a freelancer. When finances go south, I know I can hunt down some extra work and bring in some extra pay. And I did just that. I am now putting away those savings, paying down some debt, and paying my taxes!

I’m getting it together and then some. I plan to travel somewhere awesome next year with my kids. Aside from ensuring financial stability, that’s my big goal.

But most importantly, I have a whole new outlook on and a new level of respect for money. And all I can say to you is this…

Put money aside EVERY time you get paid.

If you already do this, that’s awesome. I am so happy you have your finances sorted. But I can’t be the only one whose finances have been a mess. So, if you are struggling, make a commitment to yourself. Put something away every single time pay comes in. It could be 20%, 10%, 5%, or it could be a flat $200. Just put something away!

Even $50 a month is a start. It will allow you to get into the habit of saving. Then you can increase it as you get used to doing it.

And split the money you put away evenly between savings and tax money. If you end up with more tax money than you need, consider that your bonus savings.

Regardless, you’ll find that after a few months, you’ll have a little nest-egg growing and you will feel SO relieved. Honestly, it might just be the best thing you ever do for yourself.

Because I can promise you this — financial instability is THE #1 worst kind of chronic stress you can have. You owe it to yourself to make sure it doesn’t happen to you. and if it already has, know this…

You are not alone.

I hope that if you have experience with financial struggle as a freelancer you will share it here with us, in the comments section. We can only help each other when we open up, and we can only do that when we feel we won’t be judged.

There is no judgement here, only support.

Cheers, Karen