We don't expect you to read something that we couldn't be bothered to write, and that's why we don't use AI to create our blogs. The info, advice, and opinions you're about to enjoy are straight from the brains of Holly and Sophie AKA The Good Eggs.
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Confession: until about six months ago I used to avoid checking my bank balances.
I (Sophie) would go weeks between sneak peeks at my banking apps, and every time I tapped my card to make a purchase I would hold my breath to see whether it would go through. I felt completely out of control with my finances and had decided that a head-in-the-sand approach was my best course of action for feeling calmer about my money.
It was so bad that, as a freelancer with varying levels of monthly income, I didn’t even know how much money I made each year. Obviously that didn’t work at all and I found myself spiralling into an ever-deepening pit of money avoidance and shame.
Financial Planning Was an Alien Concept
Financial planning was an alien concept to me for YEARS. The issue I faced is that most of the financial management and budgeting resources I found online were aimed at salaried workers who make the same amount of money each month, rather than at me and my less predictable freelance income.
This issue was also exacerbated by the fact that I’m a digital nomad so I also have variable expenses rather than a fixed set of bills to pay each month.
My financial overwhelm finally dissipated last year when I downloaded the Your Juno app. I could bang on for a thousand years about how much I love Your Juno, but I’ll restrain myself and just tell you what it taught me instead.
What’s Your Money Mindset?
Apparently, we all live by one of four different “money scripts” that we learn as children and then stick to for the rest of our lives.Money Avoidance
Having negative ideas about wealth and feeling like having less is more morally sound. This can cause folks to financially self-destruct — they might actively avoid making a lot of money or saving up.Money Worship
Believing that money is the key to solving all problems and achieving true happiness. These folks love to splurge because it feels good to spend (and who doesn’t want that sweet dopamine hit, right?).Money Status
Money status seekers attach their net worth to their self-worth. This can be more common in folks who grew up without money and might result in fancy cars etc., even if it means accumulating debt.Money Vigilance
The folks in this category are often wealthy but have loads of financial anxiety. This causes them to hoard their cash and hold on to it so tightly that they don’t actually get to enjoy spending what they’ve earned.
How to Get Organised with Your Money
My money script is “avoidant”, so the most important change I needed to make was to switch from anxiety and avoidance to clarity and abundance. I did this by getting VERY organised with my finances in a way that suits my variable income and expenditure (this is a useful exercise no matter what your money script is).
I Keep My Personal and Business Cash Separate (Clarity)
One of the problems I used to have was getting my personal accounts and business cash mixed up. Everything was getting paid into the same place and it was tricky to decipher business expenses from personal spending. I had no clue how healthy my business/personal finances were and also no way of keeping them separate in my mind (aka I had no clarity).
Opening a new bank account turned out to be the antidote to that. We use Wise as our Good Egg separate business bank account. We love it because it allows us to send and receive money in various currencies (handy for our American and European clients) and we can make savings pots for things like tax bills to keep our business finances nice and tidy.
I Take Myself on Money Dates (Clarity)
Every Friday I sit down and add the previous week’s income and expenditure to Google Sheets (I have one sheet for business and one for personal). This lets me see exactly what I’ve been up to with my money and helps me identify any potential cash flow issues or overspending patterns that I need to fix.
I also note down how much money I have in my personal bank accounts, savings pots, investments, and pension. This has been life-changing for me because knowing exactly how much cash I have on hand (even if it isn’t loads) helps me feel more financially secure.
I Set Myself Monthly Goals (Abundance)
I get super granular about my savings goals which helps me achieve them. For example, I split my main savings into two pots: I prioritise my ’emergency fund’ for unexpected expenses and quiet work periods and then put any extra money in a ‘big purchase pot’ that can be used for things like new tech, holidays, and saving for a home.
Building these habits has been a lifesaver. I feel empowered and in control of my financial future.
I Put Aside Money For Tax Payments Each Month (Abundance)
Saving for my tax bill gives me such a satisfying sense of abundance when it’s time to pay. I’d been freelance for around four years before I started putting this cash aside each month and it felt difficult to do so at first but trust me, Future You will be so glad you made the effort.
When I was operating as a sole trader, I aimed to put aside 25% of my income to ensure my bill was covered. Now that Good Egg is a limited company, I only need to put away 10% (more on that in a moment). I personally put my tax money into Premium Bonds because it’s completely safe but there’s the potential to win cash which is a bit exciting.
How Do I Pay Myself a Salary as a Freelancer?
How to pay yourself can be a tough thing for freelancers to figure out. I’ve tried a few different options over the years but none of them have felt quite right and I’ve ended up paying myself too much or too little.
Holly and I now have a system that works great for us — it allows us to be tax efficient and gives us and our business financial stability. This system is specifically for folks operating as a limited liability company but can be adapted for sole traders and partnerships.
We Pay Ourselves an Hourly Rate
We pay ourselves an hourly rate through payroll as if we’re employees of our business (which we kinda are tbf!). We track the hours we spend on client work and get paid for them on a monthly basis.
This has been great for how we feel about our finances because we get compensated directly for the work we complete each month. We also know that this chunk of money will cover our personal expenses, so we feel financially secure.
We Top Our Income up with Dividends
Each quarter, we meet with our accountant to determine our quarterly profit. Once we know that number, we figure out how much we can have as dividends (the percentage of Good Egg’s earnings that we receive as shareholders).
This tops up the hourly rate that we receive each month while ensuring that we can keep an eye on our business cashflow.
Freelance Finance Doesn’t Have to Be Daunting
As an avoidant girlie when it comes to money (and loads of other things tbh), figuring out my finances has been a rocky road at times. But bossing my budget is an amazing feeling and I can’t imagine going back to my head-in-the-sand ways now.
My hope in writing this post is to help other business owners figure out their finances. Because once you’ve got these basics sorted, you’ll have loads of extra headspace to grow your biz (and hopefully loads of extra money for treats and such).
A Sustainable Approach to Every Element of Our Business
We love a sustainable approach to our finances and ALSO to our online presence. Once you’ve whipped your finances into shape, take a look at Holly’s blog about eco-friendly web design. It’s jam-packed with easy-to-action tips that’ll crush your green guilt quicker than you can say renewable energy sources.
