So you just got paid, and you’re halfway out the door to buy that new pair of dungarees you’ve had your eye on… but hold up partner…
You may feel richer than you’ve felt in months. You may feel like you can finally ‘afford’ it.
But can you?
Before you buy, let’s see how much of that new money is already spent.
Take a look at: The Freelancer ‘Cheque’ List.
The Freelancer ‘Cheque’ List
1. ARE YOUR TAXES PAID?
You’re a freelancer, so there is a pretty dang good chance that the number on that cheque you’re holding does NOT represent the amount that is actually YOUR money. A big chunk of it actually belongs to the government.
No matter where you are, you need to pay taxes. So the first thing to look at is whether the person paying you has already deducted the (or some of the) tax, or if you have to do it yourself. The amounts will be different depending on where you are and how much money you make, but there’s no worse feeling than getting to tax time, and not having money to pay the bill (#personalexperience).
So as soon as the cheque comes in, if there aren’t any taxes taken off (and make sure that if the company paying you DID take them off that they took off enough), take a big percentage of it and put it far away… in a savings account, and don’t touch it until tax time
Don’t spend the government’s money… they really won’t be ‘cool about it’.
2. DOES ANYONE ELSE NEED TO GET PAID?
Have an agent? Pay your commission.
Part of a union? Pay the dues.
Is there anyone else who is owed a cut of this cheque?… it doesn’t matter how much you may not ‘want’ to… pay them now. It’s not your money, it belongs to them.
3. DO YOU HAVE ENOUGH TO LIVE THIS MONTH?
Your life costs money, and whether or not you know how much you need every month you need something (although knowing the exact number can really help: Check out: CAN YOU AFFORD YOUR LIFE ).
Rent? Phone/Internet? Food? Transit?
Before anything else is bought, make sure that the stuff you’re already obligated to pay for is covered.
THIS INCLUDES DEBT PAYMENTS. If you’re paying minimum payments on a line of credit, student loans or credit card make sure those payments are covered too!
4. HOW LONG UNTIL YOUR NEXT CHEQUE?
This is a big one. How long does this cheque have to last you?
Sure, you have enough to live on this month, but if you don’t have any work lined up for the next month… then this cheque is going to have to last you a bit longer.
It’s the number one rule of variable income. When you’re making money, make sure that you’re stocking some of it away to get you through the lean times.
5. ANY BIG EXPENSES COMING UP?
Any big expenses coming down the pipes? Holidays? Audition season? Maybe your car insurance is due?
It may seem to early to worry about Christmas, but why let it blindside you? If you’ve got money now, set some aside to cover expenses that you KNOW you’ll have to pay down the road. I promise future-you will thank present-you for it.
Letting things you know are coming take you by ‘surprise’ is just inviting extra stress into your life. When you’re living on variable income, you can’t be sure whether you’ll have more money coming in ‘later’, but you know that you do have money now.
It’s not about saving… it’s about admitting that that money is already spent.
6. DOES YOUR EMERGENCY FUND NEED A TOP UP?
As much as I try to avoid the blindside… it happens. Stuff comes up that I forgot about, or couldn’t have predicted, and it can really throw off my plans.
Having a bit of money ready to absorb the hit is INSANELY HELPFUL.
An emergency fund is what keeps debt from happening, and it can be a really useful thing to put some money into (if you’ve got a little left).
need more money for your business or debt?
Check out the store for workbooks on both debt AND making a business plan!
7. WHAT DOES YOUR BUSINESS NEED?
Your personal bills are covered, but is there anything your business is really needing?
For me, it’s things like lessons and other training that I get on a regular basis.
Putting money into your business is, hopefully, going to keep money coming out of your business, and remember… money that you spend on your business pays off TWICE: once in the thing that you bought, and once again at tax time with a big ole DEDUCTION.
8. WANNA WORK ON YOUR DEBT?
I’m not sure if this should be higher on the list or not on the list at all, but I want you to give it a thought before you spend…
YOUR DEBT IS AN EMERGENCY, and the faster you can pay it off, the better off you’ll be… but it’s up to you how you rate it as a priority.
Just keep it in mind with every cheque that you get. Take a look at those minimum payments that you paid in number 3…. And think about how good it would feel to not have that cost every month.
Throwing some money at your debt (when you have it), is the only way that debt is going to go down.
Think about it!
And after you’ve made it through the gauntlet of that list… the rest of the money can be spent on dungarees and gismos a-plenty!
Want to start getting control of your money? How can I help?
Financial Planner/Opera Singer
Money never came naturally to me. In fact… I was a bit of a disaster. I remember (very clearly) what it feels like to be ‘financially out of control’.
And honestly, I still get stressed about money… that doesn’t stop… the difference is that now I have the tools to deal with that stress.
And those tools are what’s made it possible for me to build a life full of the things I want: art, creativity, travel, family and more.