As a freelancer, successful financial management starts with the way you think about your earnings. One of the most common mistakes freelancers make is confusing the money they’ve worked with the money they’ve actually earned.
Freelancers tend to take mental ownership of money right at the booking of a job or as soon as they’ve completed the work. However, the harsh reality is that until that money is in your account, there’s no guarantee that it will actually ever be yours. You’d be hard pressed to find a longtime freelancer who hasn’t been burned by a client at one point or another in their career. Some clients take months and months to send you payment, others go MIA altogether, declare bankruptcy before they cut you a check, or make up a bunch of lies as to why they shouldn’t have to pay you.
Sure, legislation is slowly changing to help prevent freelancers from getting screwed over with payments and helping them take legal action if they are, but the point is that during the time you’re fighting to get paid, that money still won’t be available to you to spend.
The main takeaway is to remember to think that money you’ve worked for is not the same as money that is in your possession. Why is this important to keep in mind? Because the money we ‘visualize’ to be ours affects our spending habits. If you tell yourself, “I have $5,000 coming in”, you might erroneously adjust your expenses for that month and spend more than you normally would or should. The inconvenient truth is that you never know what can happen in the time between completing a job and receiving payment. To prevent yourself from getting into financial trouble, don’t add unpaid money into your mental ‘available’ money bucket. Keep those numbers separate from what’s currently disposable to you and spend accordingly.
The more you think about unpaid money not actually being yours, the more you’ll want to make sure you stay on top of collecting your payments. Staying on top of payments is a problem most freelancers face but it’s a necessary evil if you want to succeed financially.
Here are some tips to make sure that unpaid money actually gets into your hands!
A. Make sure you know when your payments are past due.
B. Be consistent about reminding your clients to pay up. Once a payment is past due, schedule a weekly reminder to follow up on payment.
C. Be polite but unapologetic about getting paid. Your client doesn’t work for free and neither should you.