what I wish someone had told me before I went freelance

how I plan for months that look different from each other financially

I was listening to Emma Grede’s audiobook ‘Start With Yourself’ and was really impressed with the chapter about women talking about money. She insisted that as women, talking about money can serve us. She mentioned that women who come on her podcast are so resistant to talk about money compared to their male counterparts. With the gender pay gap still at large, women not talking about their salaries and finances actually facilitates this gap because they don’t even know they are being underpaid.

This, alongside my own financial planning as a freelancer, and a lot of talk about the corporate job being dead, AI and just so much changing in the job market, inspired me to talk about how I make freelancing/self employment work, and how you can too. My best freelancer tips are at the end.

Fundamentals: Where you should begin

Two things to think about from the start: predictable and unpredictable income, and your biggest costs.

For me: I have something I’m building and growing (eg. Substack, your own business, freelance work, contracts) where the income is less predictable. And something that is predictable but not growing (eg. a part-time salary). The part-time salary gives you the space and time whilst you’re getting off your feet to be creative, build slowly without desperation and not rely 100% on your freelance work initially.

The income is uneven month-to-month. Psychologically, we need to somehow be comfortable with months that look very different from each other financially. It’s very expected to feel anxious about the uncertainty.

Uncertainty can sometimes feel like a lack of safety. Do you still hold tightly the story that ‘money is the root of all evil’ and ‘money is one of the biggest factors in divorce’? Have you seen money as the source of stress growing up? These factors can teach us to fear money. But money is a tool and we cannot shy away from it or ignore it. We cannot cling to old stories about money as we take uncertain steps, this will hold us back.

‘If you elegantly avoid the subject of money, money will somehow elegantly avoid you.’ - Emma Grede

Practically, to get around this uneven month-to-month, shift to thinking annually and track patterns within the year.

Examples

Some businesses are very quiet around Christmas time: law firms, education, construction. For some, this is the busiest time of the whole year: hospitality, toy shops, salons, postal services. Then there’s seasonal work, where ski or summer seasonal roles typically operate for 6 months.

For me: Living and working in Sri Lanka, my partner and I are mostly working in seasons. We know we earn most of our money from October-March and have to prepare in advance for lower income from April-September. I met a girl recently who owns a cafe in Cornwall which only opens during the spring and summer months. All her income comes from May-September and she travels for the rest of the year. The first year of this is the hardest because you don’t know the trends. But by year two and three you have a much better idea.

Know your actual monthly number. What does a comfortable month cost you: food, utilities, transport, phone, insurance, subscriptions, meals out, personal care.

If you feel anxious about variable income, some of it could be coming from not actually calculating the floor. Ever been nervous to check your bank account? Sometimes when you know the actual number, that’s actually less intimidating than the ignorance-is-bliss mentality.

Build a buffer. If this jump is something you’re planning in advance, or you know you have a higher income month or two coming up, try to build 3 months worth of your base costs.

This is definitely easier said than done, but it also depends on your ‘luxury’ outgoings. And by luxury I mean anything that isn’t essential. Having this buffer is one of the most helpful and effective things for tackling financial anxiety. It means a quiet month is then just inconvenient, not an absolute crisis. This applies especially to people moving from a salary to freelancing/contract work: try to build that buffer before you jump ship.

For me: My partner and I recently renovated a house. We used both of our monthly salaries each month plus our savings to make this happen, which actually made the experience quite financially stressful. If I was to do it again or advise anyone in the same situation, I’d say keep most of your salary for day-to-day life stuff separate from these expensive extras. If you’re renovating, have travel dreams or something else expensive, try to save for it and work towards it, even if it means it happens a little slower. As amazing as it is to have the house or the holiday sooner, the financial stress isn’t often worth it.

Practicalities

These are my top freelancer tips I wish someone had told me when I started out.

Invoice promptly. Make your invoice before the job finishes and schedule it to send for the final day of the job.

You MUST KEEP TRACK of what’s been paid. I can’t count the number of times I’ve had to chase payments (sometimes for months and years) and go clawing back through my bank statements to see if I’ve been paid for a job. Know where every invoice stands.

Have a separate business bank account. So important: your tax return will be 1000x easier, you don’t have to show all your personal spending to your accountant so you retain more privacy, and it’s way easier to track incoming and outgoing payments because they aren’t mixed up with your personal spending.

Keep ‘pots’ or saving spaces within your bank account that don’t show in your current account. Psychologically it’s easier to save, because the money isn’t just sitting there in your current account as the main figure.

Possibly the most important, yet statistically and psychologically hardest tip: don’t expand your lifestyle in strong months.

We’ve all been there. A big pay day and let’s treat ourselves. I get it. You’ve worked hard and want to feel the pay-off. It’s normal to want to treat yourself but try it on a small scale. Think of future you.

The bigger months are what make the smaller months manageable. They fund the quieter months without it, again, being a crisis. It really does take discipline but it’s what makes it sustainable. Don’t relax your spending just yet.

For me: over the last 5-10 years I’ve been between freelance contracts, self-employment, full-time employment, part-time employment, seasonal work and building my own business. Everyone is different, but I hand-on-heart know I function better when I am in control of my day, hours and time. I function better with more free time and less money (which means more uncertainty) compared to more certainty and less time.

I don’t have children or dependents, I have a partner who earns the same amount if not more than me making us a DINC (double income no kids) household. I have parents I could move in with if I needed to. These three things already create a huge amount of freedom and floor of security I know not everyone has. So take this with that context.

If you’re on the brink of going freelance, you have the means, if you’re done with your corporate job, you feel the pull of the leap then I can promise you: having your time back for work that actually means something to you is worth a lot.