While at Penguicon I moderated a panel called “Finance for Freelancers” with co-panelists Tobias Buckell and Catherine Shaffer. I wasn’t intending to moderate, but I was foolish enough to be the first one to ask who would be the moderator. Having everyone introduce themselves and tell why they became freelancers gave me just enough time to scribble a few notes so I could direct the discussion.

I feel like the whole thing went very well, due in large part to the wealth of experience that Toby and Catherine were able to share. It is a joy to moderate a panel of competent people who know how to make their points concisely. I learned some things and I felt like we shared useful information with the audience. I wish I had a transcript to post, but I can remember a few highlights. What follows is loosely connected notes from the panel:

The insecurity of not having a paycheck: All three of us agreed that the idea of freelancing sounded really scary when we were at the beginning of it, but that after doing it for a few years we all feel more secure in our incomes than we did before. This security comes as the result of having many different sources for income. When one contract dries up, the others carry you until you can pick up another contract to fill the financial gap. Both Catherine and Toby talked about having the ability to stop working for people who are difficult and how that contributes to contentment.

Health insurance: Toby gets insurance through his wife. Catherine has been getting it through her husband, but is considering cutting free of that. Like freelancing, the idea of searching for health insurance is scary, but once you get into it the fear goes away and it is merely expensive. Toby made the point that the price of health care needs to be calculated on top of what you need to pay your bills. This is part of the calculation you make to figure out how much money you need to bring in as a freelancer to make ends meet.

Organization: I spoke a little about organizing time. I have an assigned accounting day once per week where I look at my accounts. During the early years there were some weeks when I merely glanced because there wasn’t anything else to do, but I still kept the accounting appointment. We all talked about how it is important to keep the business accounts separate from the personal accounts. There was some variance about when a freelancer should incorporate, but Catherine quoted a $40,000 per year figure after which it is really to your financial advantage to be incorporated. Catherine uses a free financial management program to track her money (I can’t remember the name.) I use Quicken/Quickbooks. Toby uses Excel. All of us stated the importance of being able to do reports based on the financial numbers so that the freelancer can see where money is coming from and make good predictions for the next few months or years.

An additional note on organization: I think this point was made in a different panel, but it fits here. Creative people often have a learned helplessness when it comes to business organization. They don’t like thinking about numbers and they tell themselves that they can’t do it. Business thinking and financial organization can be learned. I taught it to myself. Over years of practice I got pretty good at it. Organization can be learned. Good financial record keeping can be learned. These things can be just as much a habit as putting on pants in the morning.

I know there was other good information in the panel. I may add it as I think about it. I’ll reiterate what I said in the panel, if you’re considering being a freelancer, you should check out Toby’s blog. He talks about this stuff and does seriously useful number crunching.