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Freelancers

Guide to

Finances

· freelancer,retirement,savings,investing,financial freedom

On Friday, someone in one of my Facebook groups mentioned that there isn't a lot of financial information for people that go from job to job, and asked for tips on saving for retirement, investing and dealing with time off between gigs. 

As I read through the thread, most of the answers had to do with more practical ways to save and invest, with a few mis-information. 

However, I didn't want to take over the thread with a super long answer, so I thought I'd write this blog post for all of you who work from gig to gig. 

On set of The Bachelor in St. Lucia, 2009

This is me above, on set of The Bachelor proposal site in St. Lucia in 2009. 

I started my television producing career in 2003, until I made the transition to Financial Coach in 2018. I worked on The Bachelor/Bachelorette for 5 of those 15 years, from 2009 to 2014. 

That was the longest gig I ever had! 

Otherwise, for most shows, it was 3 months here, 6 months there... which I'm sure you can relate.

After my first freelance TV producing gig ended, I found myself wondering how other people did it... I wanted to know, when you're in-between gigs...

How do you pay your rent and bills? 

How do you save for any future goals, like buying a house? 

How do you not panic about where your next gig is going to come from? 

In those 15 years, I had very little "down time," however, whenever I did, I went through a feast or famine cycle that may seem super familiar to most of you... 

First day, I slept in, stayed in my PJs all day, watched way too much TV and vowed to be more productive tomorrow. 

Next day, I tried to “catch up” on all of my bills and other errands that I put off while I was working. 

By the third day, I started to wonder if I should reach out to people about jobs…

... and then on the 4th day when I had not heard from anyone, I decided I would probably never work again. 

Eventually, with some luck, I would get another call. 

And when I did land a gig, inevitably, I would hear back on 1 or 2 other jobs. When it rains, it pours right? 

Well, I realized it didn't have to be this way.

I started to learn all I can about managing money because as I said in my previous post:

It's not how much money you earn. It's what you DO with the money that matters.

And this is too good to not repeat, as well: 

FACT: 15% of people NOT born into wealth became wealthy on LESS than $100K per year! That means they had the know-how, the willingness, and the discipline to do what makes the biggest difference in taking what they make and making the most out of it!

This point is huge. How you do one thing is how you do everything, and this applies to your money. If you can't manage $25K, $35K, $45K, you won't be able to manage $100K, $250K, $500K, $1 Million. It's why 70% of people who win the lottery or receive a big windfall go bankrupt within 3 years! THREE years!!!

And here are a few of the money management tools I started to implement, as a freelance TV producer NOT making $100K/year yet:

  1. Pay off debts, including credit cards and student loans, so then all of the money I was bringing in was mine.
  2. Build an emergency savings. When I first met my husband, who's also a TV producer, I asked him, if he had an emergency savings. He said "no," and I told him, "you should definitely start one!" I saved up a year's worth of expenses. I know most of the financial "advisors" out there tell you 3 months is fine, and Dave Ramsey actually says to start with $1000. However, that's great for someone with a "regular" job, someone who gets a paycheck every two weeks and who has benefits from those jobs. 3 months is NOT enough for those of us who have a lot more uncertainty about the next gig. SIX months is minimum. However, if you truly want to feel FREE, so you don't have to take every job that comes along, I would highly recommend having 12 months of an emergency savings. Make sure it's in a high interest savings account. In my last 5 day challenge in August, I offered a quick guide on savings, that included accounts for freelancers, with the highest interest available.

3. Make sure you're protected. Get health insurance. Get on an exchange or work with an insurance broker who can help you find something that's best for you and your circumstances. Just like an emergency savings, insurance protects you, just in case. You may also want to consider disability insurance, and if you have kids or someone else is relying on your income, you should also get term life insurance.

Finally, if you're making at least $50,000 per year and most of your income is 1099 rather than w2, I suggest that you incorporate. Speak to your accountant about the entities that may suit your situation best, however for most freelancers in the entertainment industry, an LLC, filing as an S-Corp, is what most people have. The reason? You can still file for unemployment (even if there isn't a pandemic exception). 

A lot of accountants especially in CA, who are not as familiar with the entertainment industry, will suggest that you incorporate after making $100K per year because every LLC that is doing business or organized in California must pay an annual tax of $800, regardless of any income made or not.

And I get this concern.

However, I want you to think about this... without an LLC, you can put away $6000 per year MAX, if you're under 50, or $7000 annually, if you're over 50, into either a Roth or a Traditional IRA, which helps you minimize taxes. 

If you're self-employed though, you can put away anywhere from a minimum of $13,500 per year, or a maximum of $19,500/$26,000 AND up to 25% of your earnings with a cap of $57,000! 

So for example, if you made $50,000 per year and you're under 50, you can put in $19,500 + $12,500, which totals $32,000.

 That's a heck of a lot more than $6000 per year. And definitely worth paying an $800 annual tax. Most of us wouldn't have a great way to save for retirement, otherwise. We're not getting benefits, with matching 401(k)s. 

You have to be take care of you when you're a freelancer. You're essentially a business owner, without a lot of the protections and benefits of a business owner, so it's great if you started now.

Now, if you want to learn some next steps YOU can take in your financial freedom journey, I created a Money Personality Quiz because I don't think money is a one-size-fits all thing...

Finally, I want to give a few pointers that are perhaps not as numbers driven -- first, make genuine friendships in the business. It's the best way to "network" without networking. I never got a job in the business, by interviewing. 

Sorry StaffMeUp. It didn't work for me. 

Every.single.job. I ever got in the entertainment industry was through someone I knew.

Next, negotiate every single gig you get. It's the best way for you to keep building up your savings and investments, as well as your overall salary in your lifetime. (If you want to learn more about negotiating, let me know, as this is my zone of genius.)

Lastly, in-between gigs, besides seeing friends and finding cheap but filling happy hours (McCormick in downtown LA used to offer a $5 burger and beer during happy hour), I would learn something new. It kept me from worrying about the next gig, and it helped me to have the skills I can use later. What lights you up? What are you passionate about? Find an online course to learn more about it. Plus, it keeps you creative and engaged, which is the opposite of passively watching too much TV and staying in your PJs all day. 

You can also challenge yourself in the 30 day money habit challenge, which will sign you up for my weekly newsletter. 

With Love & Gratitude,

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