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freelance money

Expenses Freelancer Writers Can Do Without

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by Yolander Prinzel

Freelance writing is not like other businesses. You don’t have to spend the same money on expenses as other business owners do. You should have relatively low overhead–unless you are trying to create some write-offs.

Here is a list of the expenses you can go without and still function:

1. Graphics design. A lot of freelance writers are overly concerned with visual branding in the form of logos and other graphics. Now, I’m not saying there is never a time for this but I know many successful freelancers who are close to six figures in income who have not bothered to spend money on a logo. As a matter of fact, the most successful writers I know haven’t bothered with this expense.

2. The newest Office Suite or other word processing software. While I’m not an advocate of Open Office (personally, I found it difficult and uncomfortable) that doesn’t mean you have to by the latest Word incarnation that hits the stores. You can use Open Office if you want free software or you can buy an old, used version of Word on Amazon.com.

3. Adobe Creative Suite. As a writer, you probably don’t have to do much photo manipulation. If you’re doing newsletters or brochures for clients, you may need InDesign, but chances are Publisher will work just find–and it’s a lot easier.

4. A CRM (customer relationship manager) program like ACT! Let me get this off my chest–I love ACT! and will probably buy myself a used copy. That’s because I’ve use it for years and know how to edit the database to create and edit fields. I can customize it to my needs in a way that Excel and Access won’t let me. That doesn’t mean everyone needs to buy it–or any other CRM program. If you want to organize and keep records on your clients you can use Excel, Access or any number of free online CRM systems.

Yolander Prinzel, ACS is a financial writer as well as a series 7, 66 and 2-15 licensed financial representative. With a decade of financial industry experience, she was the National Director of Marketing and the Director of Operations for The Compass Agency USA and has also been a trader for Raymond James Financial Services and a life insurance underwriter. No matter what you may think, none of her posts are advisory, they are simply informational. Only an advisor with close, personal knowledge of your financial situation can offer advice.

freelance money

Freelancers, If I had My Hands in Your Pockets, These are the Things I’d Do

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by Yolander Prinzel

Sorry to get your hopes up, but this is not a dirty post. Oh that it were. Unless, of course, you consider money dirty. The purpose of this post is to tell you exactly how I would set up your finances if I could.

To some of you, my methods will look extreme. “Oh Yolander,” you’ll cry, “can’t we just use one account for spending, saving and bills?” No, no you can not. Okay, maybe some of you are up for that responsibility, but a lot of you probably aren’t. For many of you, I would even venture a guess that when you see a large balance in your checking account, you feel safer spending money–even though most of that balance is money you need to send to the IRS in 2 weeks. To change your relationship with money, spending and saving, I suggest the following.

Savings Accounts

I believe in multi-tiered savings. I think that you should have:

1. An intermediary savings to bridge the gap between bills that are due and invoices that are late or to help out in slow months.

2. A business savings for taxes and other potential business expenses.

3. A long-term savings account with funds in CD or bond ladders (a ladder means that there are multiple CDs or bonds in your account with different maturities so that you aren’t putting all your money in a 10 year bond. You’ll have some that mature in 1 year, some in 3-5 and some in 10. That reduces your interest rate and penalty risks.)

4.  A brokerage account with a mildly aggressive portfolio for you young uns and a more conservative blend for people in their 40’s and up. The brokerage account can be funded with extra money or some of your long-term savings.

5. A SEP IRA.

Checking Accounts

I also like different checking accounts for different uses.

1. A bill paying account. This account should be linked to your intermediary savings account and should be used for bill paying only.

2. A spending account. This is where your grocery money, gas money, and entertainment money goes. This is the only account you use for spending and should not be connected with any saving’s accounts.

3. A business checking account for business expenses and to deposit payments.

Now What?

Remember this post about where to put your money? Here I’m going to give you a road map to follow [click for a larger image (I’m aware of the spelling mistake(s) in the chart but it was too hard to put it up–I’m not fixing it)]:

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Yolander Prinzel, ACS is a financial writer as well as a series 7, 66 and 2-15 licensed financial representative. With a decade of financial industry experience, she was the National Director of Marketing and the Director of Operations for The Compass Agency USA and has also been a trader for Raymond James Financial Services and a life insurance underwriter. No matter what you may think, none of her posts are advisory, they are simply informational. Only an advisor with close, personal knowledge of your financial situation can offer advice.

freelance money

Freelance Budgeting Basics

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by Yolander Prinzel

This morning I’d like to give you an actionable plan for budgeting. As a freelance writer, your budget (if you’ve even dared to write one down) probably looks like the jagged edge of a dog-mauled carcass.

Okay, maybe that’s too strong a visual for this morning. What I’m trying to say is that your income varies–some months it’s a big number and other months…maybe not so much. That makes budgeting difficult, but not impossible.

1. Make a list of your non-negotiable expenses. Things like rent or mortgage, insurances, electricity, retirement and long-term savings and food.

2. Make sure you have an intermediary savings account with at least 1 month’s worth of these expenses in it. The purpose of this account is to help you deal with slow paying clients or slow months. If you take from it, you need to work extra gigs in order to replenish it.

3. Next, write down your negotiable expenses. Things like cable, phone, cell, entertainments, etc. These expenses may not be negotiable with the entity you owe money to, but they are not keeping you alive or with shelter so if you had an emergency, you could justify not paying them.

4. Combine lists 1 and 2 into a master list of your expenses. This is what you really need to make each month in order to fulfill your budget.

5. Now, write down all the steady gigs you have each month that have a “guaranteed” income amount.

6. The difference between the amount of steady income you have and your combined list of expenses is the amount of money from additional gigs that you need to make.

7. At least 25% of the money you get from gigs that put your monthly net income over the amount you need to cover expenses should be put in your intermediary savings and another 25% should go to your long-term savings.

As a freelancer, it’s difficult to budget far in advance. Often we don’t know from month-to-month what our workload or income will look like. That’s why it’s so important to control your expenses and set aside any extra income you make.

Be sure to stop by on Tuesday because I have a totally awesome chart for y’all.

Yolander Prinzel, ACS is a financial writer as well as a series 7, 66 and 2-15 licensed financial representative. With a decade of financial industry experience, she was the National Director of Marketing and the Director of Operations for The Compass Agency USA and has also been a trader for Raymond James Financial Services and a life insurance underwriter. No matter what you may think, none of her posts are advisory, they are simply informational. Only an advisor with close, personal knowledge of your financial situation can offer advice.

advice, freelance money

Freelance Writer Savings Plan

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by Yolander Prinzel

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I have a super simple plan for you that will help you get disciplined about retirement, tax and emergency savings. It’s so easy, even a nano-armored baboon could do it.

Of course, being easy in execution does not mean it’s doable without discipline. You have to want to save in order for this to work.

1. Set up a personal savings account.

2. Set up a business savings account.

3. Set up a SEP IRA through Scottrade, Ameritrade, Schwaab, whatever.*

4. Whenever you receive a Paypal payment from a client, transfer 5% from Paypal directly into your personal savings, 15-20% (depends on your tax bracket and deductions) from Paypal directly into your business savings to cover taxes, and up to 25% (not to exceed $49K total or 20% of profits for Sole Proprietors and LLCs) into your SEP (you may need to transfer to a bank account first, but don’t let that distract you from your ultimate goal).

5. When you get a check for payment from a client, deposit it into your business account and then make the same allocations as above.

6. Live on the remaining 50-75% of your income.

Now, how hard it that? And if you balk at saving 25-50% of your income, then you have some serious thinking to do.

  • If your roof leaks, pet, self or spouse gets sick, car breaks down, air conditioner breaks, etc. you will need some savings to fall back on.
  • If you plan to ever retire, you’ll need some retirement savings to support you.
  • If you would like to keep the IRS happy, you need some tax money set aside.

*Please remember that an IRA is not an investment in itself–it is just an account that allows investments to grow on a tax-deferred or tax-free (ROTH) basis. After you deposit money into your IRA, you will need to use the money to buy equities, bonds, annuities, mutual funds or CD’s.

Yolander Prinzel, ACS is a financial writer as well as a series 7, 66 and 2-15 licensed financial representative. With a decade of financial industry experience, she was the National Director of Marketing and the Director of Operations for The Compass Agency USA and has also been a trader for Raymond James Financial Services and a life insurance underwriter. No matter what you may think, none of her posts are advisory, they are simply informational. Only an advisor with close, personal knowledge of your financial situation can offer advice.

freelance money

How Currency Exchange Rates Should Determine Your Marketing

tube_london_phone_269976_lby Yolander Prinzel

When the value of the dollar plummets compared to the Yen, Euro, Rupee, or any other foreign currency, it is generally a bad thing.

As a nation, the goods we import from other countries become more expensive because we have to use more of our dollars in exchange for the currency used by the exporting company in order to pay for them.

Travelers and currency traders find their dollars making less impact as well.

But for freelance writers, the declining value of a dollar is a great time to target your marketing to other countries.

As an example, in the beginning of March, the value of one dollar in Euros was .7896. That means an article you charge $100 U.S. dollars for would cost your British, German, Irish, etc. client $78.96 Euros. Today, that same article would only cost your overseas, Euro-using client $69.58 because the value of the dollar has dropped to .6958 Euros. It’s almost like offering a sale without changing your bottom line at all.

In order to capitalize on this, you should know both the historical value of the U.S. dollar as well as the current value. Now, go have fun with that marketing spin!

Yolander Prinzel, ACS is a financial writer as well as a series 7, 66 and 2-15 licensed financial representative. With a decade of financial industry experience, she was the National Director of Marketing and the Director of Operations for The Compass Agency USA and has also been a trader for Raymond James Financial Services and a life insurance underwriter. No matter what you may think, none of her posts are advisory, they are simply informational. Only an advisor with close, personal knowledge of your financial situation can offer advice.

freelance money

Should Freelance Writers Choose Cash or Accrual Accounting?

freelance pay issues

by Yolander Prinzel

If you haven’t already, you have a very important choice to make about your business. Eventually, you’ll need to choose whether your business uses the cash or accrual method of accounting. “But wait” you’re thinking, “isn’t accounting, accounting, accounting? What is this cash or accrual method you speaketh of?”

Well my Elizabethan friend, it is basically the timeline in which you choose to report your income. No, that doesn’t mean you can pay taxes on today’s income in five years (wouldn’t that be nice) but it is an extremely important decisions for all businesses, but especially freelancer writers.

When you choose the accrual method, you must pay taxes on money you haven’t collected yet. As soon as you invoice someone, you’ve accrued an income that hasn’t been collected and you must pay tax on that income even if the client stiffs you for 6 months. Anyone who has ever worked for a print publication has probably just broken out into a cold sweat—get your hanky and wipe off that wet, salty fear because I’ve got a solution for you. Continue reading Should Freelance Writers Choose Cash or Accrual Accounting? →