Let’s talk about money

Navigating finances as a freelancer

I didn’t go freelance to make more money. For me building a more varied, creative and fulfilling career where I had the freedom to take more time off was much more Important. But obviously we all got to earn money!

When I did my review of my first 3 months as a freelancer I calculated I’d earned 60% of what I would’ve earned in my full time job in the same time frame. Which is obviously a big financial hit. For me, navigating finances was one of the most daunting things about going freelance. Since making the leap I’ve had to spend a lot more time thinking about money than when a consistent pay cheque would just roll into my bank account each month.

In preparation for going freelance, I made sure I had a buffer of 3 months wages saved in my bank. I had some savings from a family member, which helped massively here. I also don’t have any children or other people I financially support, which was part of the reason that I decided this was the right time to take the risk of going self-employed.

In the end, it worked out that I didn’t get my first freelance pay cheque until 3 months after leaving my full time job. I spent the first month looking for work, started working the next but didn’t get paid for that work until the month after. So those 3 months of savings I had budgeted for actually worked out pretty perfectly. But rather than relying completely on savings, I also made quite a few changes to reduce my spending, like:

Getting books out of the Library or taking books off my shelves that I haven’t read rather than endlessly buying new books on Amazon at £10-£15 a pop.

Getting the bus rather than the train, which does take longer, but is so much cheaper. It takes 1 hour 30 mins and costs £40 for a train to London or takes 3 hours and costs £4 for the bus, so twice as long but a 10th of the price!

Cancelling lots of monthly memberships. I used to have monthly memberships to a fancy yoga studio, a climbing gym and a pool. Cancelling them all took a weight off my shoulders, which I didn’t even realise was there. I wasn’t using all of those memberships nearly enough and often felt guilty/ pressured to do so. Now I go to a community yoga class in the church hall, go to a free running club and just do pay as you go at the pool or climbing gym which definitely works out cheaper.

Reducing my spending on coffee and pastries. My old office was above an amazing coffee shop that did the BEST pastries and honestly I spent so much money in there. At the end of last year Monzo presented me with my 2023 wrapped, which tells you where you’ve spent your money! 🫣 It revealed to me that I was in the top 1% of customers for this coffee shop which made me feel like I could laugh and cry all at the same time. I explained to my friend that it’s probably not as bad as it sounds since I’m only in the top 1% of customers who use Monzo not all customers ever. She gave me a side eye and said, stop trying to make it sound better than it is 😅.

Buying clothes second hand from Vinted! Ok this can be a bit of a slippery slope since things on there are so much cheaper that you can end up buying more and not realising how much it all adds up. But on the whole, I definitely spend less than buying clothes new. I also sell clothes on there too so that helps to offset my spending.

Putting our place on Air Bnb. As I said one of the reasons I wanted to go freelance was to spend more time travelling, but that can be expensive especially with accommodation, so we’ve got our house on Air Bnb and when we went away over Christmas we earned some money from it. It was a bit stressful having to effectively move out and get everything properly clean but I think we will try it again this year as a good way to offset our travels. I’ve also heard of people mentioning house swap which sounds interesting and would make me feel like I was Cameron Diaz in The Holiday.

Keeping my business outgoings as low as possible. I’m using the free versions of software and holding off from getting things like an accountant until I’m more established. Right now all I pay monthly for is my Google email address, my business insurance and some travel which all adds up to less than £100 a month. I have a whole list of software and equipment that would make things easier for me but I’m holding back for now.

I thought that making all of these changes would feel like a loss, like I was missing out and denying myself of stuff, but I’ve been surprised that it actually feels quite calming and enjoyable trying to live with less excess and more consideration. Some of these switches have in fact added a lot to my life and felt much more wholesome and fulfilling. I’ve loved visiting the local library and browsing the books, prefer the yoga classes in the old church to the swanky studio, and have found some real unique gems on Vinted rather than soulless mass produced clothes I would have previously bought.

So far as a freelancer I’ve been working with a day rate structure and charging clients based on the time. I’ve found it really hard to work out what my day rate should be. I’ve tried different approaches to figure it out, I’ve made a spreadsheet of any day rates advertised on contract roles, asked other freelancers and tried to calculate how much I need to charge to fund the lifestyle I want. To be honest I’m not sure there is an exact science to it!?

Another thing I’ve grappled with is writing proposals for projects and coming out with figures that just seem too large and ridiculous to me. I’ve never worked at an agency, which I think would help give me some reassurance that companies do happily pay really large sums of money for this type of work. But me charging like £5k for a couple of weeks of work just made me squirm!

I think there’s probably a lot tied up in there around my confidence and self worth, and not believing in myself enough and the value that I can bring. I’m sure there are lots of people out there who would happily charge that much and not bat an eyelid. If you’re one of them please impart your wisdom on me!

I’ve also been thinking about whether charging for time is the right way to go about it. More and more I’ve been hearing people speak about the limitations of this. First, it adds a big glass ceiling that means you can only earn as much as the hours in the day, and it punishes you for being good at your job, the more experienced you get the faster you work and therefore the less you earn.

Instead, I’ve heard people speak about charging for outcomes or based on the value the work will bring to the company. Which I think I would find even harder to calculate but I’m interested to explore.

So here’s my honest conversation about how the finances of freelance. Talking about money can sometimes feel like a minefield and I was a bit apprehensive to post this as everyone’s situation is so different but I think transparent conversations about money are really important and have been inspired by other freelancers like Nikki Groom, Emma Parnell and Hannah Ashe who have done the same.

If you found this post useful please share it with someone else who might too. And let me know, do you have any tips for navigating finances as a freelancer? Or any podcasts/books/courses that you have found useful?

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