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Morning, colleague!
Firstly I just want to say thanks to everyone who got in touch after the last issue to commiserate about shitty previous jobs. It meant a lot to hear about your experiences (I’m keen to hear more if you’d like to share yours) and I’m hoping to work some of them into a future issue. It’s so important right now, IMO, to remind ourselves of why we’re out here, doing this.
For even more solidarity, do come along to Friday’s free accountability session. We’ll be reviewing your January - celebrating your wins; problem solving anything that’s not worked too well - and setting some public goals for February. It’s all very casual and there’s absolutely no pressure - just a chance to offload over coffee with other women who get what it’s like.
Right. Time to talk money. And please, don’t stop reading here. I know it’s a super uncomfortable topic, but there are some super teeny tiny goal suggestions coming up - and just imagine how amazing you’ll feel to squeeze one of them in before the end of the month. (And feel free to brag to me if you do!)
I don’t know about you, but I started out in self-employment with only a hazy idea of what to do about money. I was focused on a) earning some, and b) paying my taxes - everything else felt like too much hassle.
Now that I’m a bit further into running my own business, I’ve started to think about things a bit more carefully. In fact, one of very few things I accomplished work-wise in December, was beginning to draw some important divisions between my work and personal finances. I was helped in this by the marvellous Ellie Austin-Williams from This Girl Talks Money (I paid for her services, this isn’t an advert). And I thought you might also benefit from some of her wisdom too – after all, making your money work harder is a feminist issue.
Women do worse financially across the board
“The stats tell us that in all financial areas – wealth; earnings; investments; pensions – women do worse,” says Ellie. “There are a few different factors behind this, obviously for issues around pay it’s partly to do with maternity leave and childcare.
“A lot of longer term issues are down to the fact that women don’t start thinking about their money when they probably should. The stats show that women have way more money in ISAs rather than shares, and they tend to be more cautious than men – men will often take risks even when they don’t understand things fully.”
Here are lots of ideas for financial goals, no matter where you’re at currently, as well as some changes I’ve personally made. (And I would say that these are things I put off doing for months…which ended up taking a couple of hours, and have made such a difference to my peace of mind).
Are we bad with money?
Women who aren’t making their money work hard, according to Ellie, tend to fall into two camps:
“People who have emotional issues with money, for example, you earn lots but spend it all, and find it hard to break bad habits.” If that sounds like you – don’t panic, it’s surprisingly common, and like most habits, has a lot to do with how you were raised. Another nice excuse to heap blame on your upbringing, then! “People often carry the misconception that if they earn more they’ll get better with money,” but, warns Ellie, sadly that’s not the case. Instead you’d be better investing some of your cash in therapy or speaking to a financial expert to sort your issues out.
“A lot of women in their 20s – 40s want to get ahead financially but don’t know where to start. There’s so much jargon and assumed knowledge in the financial sector, and it’s about simplifying things.”
Being self-employed, of course, can make money feel even more emotionally loaded.
“When you’re employed it’s easy to know what you’re responsible for financially, but being self-employed you need to know what you’re worth and what to charge – it’s tricky,” says Ellie – who uses an accountant to help with her own finances.
“We all have automatic money behaviour, and if you’ve never looked at it on a personal level, it’s likely those habits are going to translate into your business finances. Get a better handle on the money coming in, and the easier it is to handle your business too.”
How to set financial goals
As with anything else, a financial goal is just working out where you want to be in the future, and then the steps you need to follow to get there.
So how do you start?
“Asking questions. A lot of people feel they should know this stuff, but most of us don’t really understand pensions – I didn’t start out knowing it either! It can be confusing but don’t be afraid to start at the beginning and find what works for you,” says Ellie.
Some small financial goals to try
Obviously I know many people’s finances have taken a real knock during the pandemic, but there are always active steps you can take towards the future, even if it’s just committing to reading more about money or asking questions. There’s no real ‘one size fits all’ with financial resolutions, but any of these could be helpful short-term goals.
Keep a spreadsheet for a few months to track your spending, separating out business and personal expenses, as well as household and essentials. Banking app Monzo makes this easy, but I’ve also found a list of alternative budgeting apps.
Get into the habit of separating your estimated taxes (roughly 20-30 per cent) from every payment into a separate account if you don’t already, to make paying your tax bill (slightly) less painful.
If your finances allow, you could also consider creating a pie chart from your estimated post-tax earnings. Ellie recommends roughly 50% should be for essentials, 30% for fun things and luxuries like getting a takeaway, and 20% for future you – savings, investments and dealing with any debt.
Fix up a consultation with a money coach or independent financial advisor to talk about your money woes and bring some clarity to your cash. They may also be able to help you if you’re wavering on whether to remain a sole trader or make the leap to a limited company.
Do a deep dive into your pension pot – actually use that terrifying calculator that suggests how much you ought to aim for. Then have a gin.
Don’t have pension? There’s never a bad time to start one! “Only around 27 per cent of people save into a pension, and for women it’s less. Even if it’s just £10 a month, that’s going to grow,” says Ellie.
Decide if your current banking situation is suitable – are there things you could automate to save you time? (eg separating out your taxes; setting up direct debits for regular business expenses.)
Review what’s going out, and if you actually need it – from software to memberships.
Commit to making your finances part of your routine. Ellie recommends up to 30 minutes per week of checking what’s what in your account for your personal finances, and between 30 minutes to an hour per week on your business accounts, including chasing up those pesky invoices.
If you’re really keen – set a financial goal for each month of the year! “Perhaps thinking about your savings, income, looking into investing, reading a finance book or speaking to an accountant.”
What I’ve changed in my finances
Here are some steps I’ve personally taken in the last month to improve my financial situation. (Obviously I am so far from a financial advisor it’s laughable and this isn’t in any way advice – more of an FYI. If you want to make similar changes, consider speaking to someone who knows what they’re talking about! Also, again, none of this is an advert/sponsored post/affiliate link):
I’ve set up a pension – yay for me! It’s something I had previously in office jobs, and while I no longer get contributions from my employers (sigh) freelancers do still get government top ups. I went with Penfold, mostly because its flexibility suited me (you can top up whenever you’ve had a windfall, or lower your contributions in tough months).
I separated my business and personal finances into two accounts. (I’m sure lots of you – especially those who run limited companies - are far ahead of me already, but in case it’s useful for others.) Ellie was really helpful with the practicalities on this. I went with Coconut who offer business accounts for sole traders for a monthly fee. I plan to have any business expenses come from there, as well as sending invoices directly through the app, so that I can then ‘pay’ my personal account a monthly salary. There’s also an automatic setting to squirrel away my taxes within my account so I don’t need to do it manually. Basically, all of this is to stop me feeling so confused about what’s ‘my’ money and what belongs to my business/tax pool, etc. [If anyone wants a referral code to either Coconut or Penfold then drop me an email as both offer mutual referral bonuses I think…]
I know all of this can feel overwhelming – especially when life = chaos right now – but personally I’ve found getting a slightly tighter grip on the financial reins has made me feel much calmer in the day-to-day.
I still have a way to go – I’m still rather lacking when it comes to budgeting, and need to work out where to put my savings for best impact – but if you’re working out of one bank account, I’d definitely recommend considering a bit of separation. Being your own ‘brand’ as well as a unique human can feel blurry enough, so a financial distinction might give you a bit of headspace.
Ok end to the scary finance talk, I promise. Here’s just a quick announcement to say February will be Love Month (highly original, I know). I’ll be helping you fall back in love with self-employment, look after yourself, and generally feel all mushy. It’s going to be great.
With that in mind - I’d love to hear from you. What do you love most about working for yourself? Please hit reply and let me know.
Please consider sharing Out Of Office with your friends - it would make me feel extremely loved in February to see those subscriber numbers grow!
I love all of the advice here! I can't recommend using a spreadsheet enough. I started using one a few years ago for personal finances before I was freelancing full time and it helped to already be in practice now that I'm doing all of my income myself too lol.