Money money money! It’s a big deal if you’re self-employed, and learning to manage an irregular income is half the battle for freelancers.
So I talked with Joseph D’Agnese and Denise Kiernan, authors of The Money Book for Freelancers, Part-Timers, and the Self-Employed about just that. The book goes over everything, including starting an emergency fund, taxes, health insurance, retirement options, and even how to save for some fun. I would not be this financially sound without having read it. It’s empowering, too, combatting the idea that all freelancers must be poor. Theirs is one of three books I recommend to any freelancer.
The authors have been kind enough to offer two copies for a giveaway. To enter, comment on the post with your biggest freelance money victory or defeat (or, if you’re still gainfully employed, your biggest money concern should you hang out your shingle). Deadline for comments is 11:59pm on September 23. I’m on vacation next week, so I’ll pick a winner through a random number generator on September 24.
1. How did you guys become freelancers? Anyone who works as a writer thinks about freelancing from time to time. Can I do it? Can I pull it off? Both of us have had real, nine-to-five jobs. Joe had been gainfully employed for about ten year or so after college. But when he got laid off from a dot-com that lasted all of fifteen minutes, he decided to go freelance. Though Denise is younger, she’s actually had more experience freelancing on her own. She’s had jobs here and there, but she always managed to go back to freelancing. At this point we’ve both been doing more than more than a dozen years now and it seems to suit us best.
2. What was your first approach to finances?
We did what most people do: the money came in each month from various sources and we’d “try” to save, which is code for not saving much of anything. Before we were married, each of us had a system we used, but we didn’t apply it rigorously all the time, and when we got married we didn’t implement a system in place for how to do that, and we tended to figure out how we would integrate our two systems. So we kept all our money in one checking account instead of setting some aside in other accounts for special goals.
3. What made you say, “That’s it – we have to figure this out”?
We tell this story in our book. We actually were not aware that we had any problems until both our house and our car fell apart on the same weekend. Then we realized that we didn’t really have much of a safety net to fall back on. We had to get serious. We had to start saving on a regular basis. We needed an emergency account to save us from disasters. We needed to take ourselves more seriously as business people. Now—we had been doing a lot of this stuff, but it wasn’t consistent. This experience taught us we needed to go ninja on our finances.
4. What’s the biggest mistake freelancers make when it comes to money?
We are constantly surveying freelancers we meet and revising what we think some of the big problems are. There’s no one problem, but a host of them. Let’s see: A lot of us don’t have an emergency fund. A lot of us don’t save during the year for our taxes—or pay our estimated taxes. A lot of us don’t have health insurance. A lot of us don’t save for retirement—or save enough. And another weird biggie: a lot of us live for the big score. In other words, we tell ourselves that we cannot possibly do these things now on the money we’re making, but we’ll do all of these things when the big money comes in. That’s not good planning. That’s how cat burglars think. The way to save money and get ahead is to save a little at a time, each time the money comes in the door. It doesn’t have to be a lot. Your best practices just has to be consistent.
5. What would you say to a freelancer who says he or she can’t save anything?
We’d say reverse the statement. Can you spend anything? Why is it that you’re able to spend a little here and there every month on discretionary items but not save? If you can “do” discretionary spending, you can do discretionary saving. All you have to do is come up with a plan and stick to it. It doesn’t have to be a lot. It can be a little every month—5 or 10 percent of what you’re bringing in—and then, when you get comfortable with that, start increasing the percentage. That’s the heart of our plan…
6. I’m getting tired of the idea that freelancers are destined to a life of penury. How does your book help freelancers avoid that fate?
We know what you mean. It’s sort of built into our culture at this point that being a freelance anything—a freelance writer, web designer, artist—means you’re a step away from starvation. But no one every thinks that of the person who calls himself or herself an “entrepreneur.” But what you are: a self-employed business person. All we try to do in our book is give people a plan that they can implement tomorrow in a very easy way. We guarantee you that as soon as you see how easy it is to save, as soon as you see how quickly the money adds up, you will be motivated to save more than you spend. All we’re saying is try!