Famine and Feast: The Life of a Freelancer
Working an 8 to 4 gig might suck, but getting a steady pay cheque at the end of the month doesn’t. For people, like myself, who live on the edge, doing freelance/ consultancy work is a double-edged sword.
Ideally, you’ve got full freedom over how you spend your time, and you actually have more control over how you plan your life. You have a bit more freedom than the salaried employee, who needs approval from their boss to take a vacation, and yes, you may have to consider the workflows of your clients’ projects and when they’ll need you.
However, the reality is that you’re the CEO, clerk and janitor of your affairs, so you often end up trying to bribe Father Time for just a few more hours in each day. It’s a sad joke they play on you, making you think you have more free time. Is now self that time is even more of an issue!
Then there are the two, little accountants on your shoulder. One says, “Yes, go on that trip, backpacking in Europe”, while the other nods his head in disapproval, reminding you that you’re not cocksure of where your next cheque will come from.
Being on your own. Everyone wants it, but do they know the two sides of the coin? One month, you may be making it rain with cheques coming in left, right and centre. Another month, you’re busy, emailing clients to find out when exactly do they plan to hand you your cheque. Remember there’s no monthly pay cheque to play with. You can’t afford to build up credit card debt, with no idea of how you’re going to pay off a lump sum.
With this sort of inconsistent cashflow, you’ve definitely got to get an upper hand on your financial management skills. Even if things are going smoothly, and you’ve been maintaining a healthy income stream for the past six months, in the back of your mind, you’ve always got to plan your spending and saving in a way that keeps you liquid, just in case things dry up for a few months.
Peaks and troughs. Famines and feasts. They’re a reality for freelancers and entrepreneurs, and you’ve got to prepare for them. Amidst the fanfare about entrepreneurship, some people forget these things.
For the newbie, yes, the freelance life is risky, but you can calculate your risk, and decide how to navigate this new terrain. It also helps to have some friends and family you can vent with when you begin to feel anxious about your uncertain, financial position. Since the best advice comes from those with experience, I spoke to a few freelancers and entrepreneurs to hear how they manage their affairs.
Track your bills and invoices
You mightn’t start getting a steady stream of income overnight. However, it’s helpful to track even the smallest bill incurred or invoice generated. These help you to project spend and income, and to figure out what actions you can take, based on your expected financial situation.
Spend time generating new business
Spend time networking, and doing the necessary follow-up with old clients. Sometimes we get so busy, working and pulling all-nighters, that we don’t raise our heads until we’ve cleared the pile on our desk. Then two weeks later, you’re twiddling your thumbs, waiting for the next round of work. If you want to normalise your income, you’ve got to line up work for when the desk starts to clear. Remember, the longer you take to generate new business, the longer the lead time before a new cycle of cheques fall in your lap.
If you take a while to generate new leads, just occupy yourself. Fix your invoicing system. Clean up your messy office. Or in my case, clean up the million versions of one file that you’ve saved.
Time management can help free up the time you need to generate new business. This goes for full-time freelancers and entrepreneurs, as well as people who hold an 8 to 4, but also have a side hustle. You’ve got to make time to work in your business, and on your business.
I’m not saying that you’ll be living hand-to-mouth, but the reality is that because of your uncertain, financial situation (one month you’re rich, the other you’re surviving), it’s wise to save a little, no matter how little it is. Having a little nest egg for unforeseen circumstances helps you to maintain a normal heart rate when you’re anxiously waiting to collect cheques.
You also have to think about your life stage. Do you want to get a house? Are you getting married? Do you have children? These things mightn’t be a concern right now, but they will be in a few years. So plan your saving strategy for these milestones.
Avoid being an ant
When the going is great, it’s easy to forget that a period of famine may be approaching. With cheques, and big cheques at that, coming in one after the other, it creates a false sense of wealth. When you’re on your own, sometimes you have to hoard your riches, for when dry spells come.
These are just a few of the things you need to do to make sure you spend less time on the feast and famine roller coaster. If you’re thinking about working on your own, be sure to list personal finance management as a priority, in addition to looking at what resources you need to start a business. After all, having your freedom is well worth the extra responsibility of carrying the weight alone. However, it’s even better when you’ve got some cash to show for it.
Check out the rest of this week’s issue (Issue 32, 15/11/10)
- Etienne Charles: Jazzy and Original
- Brainwashed: For the Love of all things Foreign
- A Migrant’s Tale: Bittersweet Reflections of T&T
- Carbon Copied Love: How Parents affect our Relationships
- Masturbation: Taboo, Lies and Easing d Tension
Image courtesy iStockphoto.com; AndrewJohnson