Freelancers: What’s the ‘oh hell no’ money mistake you’ll never make again?

by Rachel Smith
16 February 2024

Just about every freelancer I talk to has made one or two big money stuff-ups. Tax blunders. Not putting super away. Charging woefully low on a job that ends up being a nightmare.

For me, I’ve made a few:
💰Spending too many years drowning in a shoebox of receipts and endless invoice files before moving to Rounded
💰Taking too long to hire a bookkeeper and losing sleep over business finances
💰Assuming I know what the client’s budget is, and letting that influence my quote, when actually the client’s budget is none of my business and my price is my price!

hope the landlord takes an iou
We’re guessing not

Anyway, when it comes to cautionary financial tales, none of us get off scot-free – and sometimes, we learn the most from our missteps. So in this post, we’ve joined forces with our sponsor Rounded to ask a few solopreneurs about the money mistake they’ll never make again.

Money mistake #1: DIY’ing your own taxes

Copywriter Angela Denly has been working for herself for many years, but she admits when she was starting out, her biggest mistake was to DIY her own income tax every year.

the office crying
Noooo…. it feels like it was tax time just yesterday

“It would take me endless hours trying to figure things out and THE FEAR that I was doing it wrong was causing so much anxiety,” she remembers.

What does she do differently now? “For about five years now, I’ve engaged a wonderful accountant. She knows all the deductions, helps me calculate super contribution amounts to adjust tax liability, and just generally gives me a peace of mind that is worth every (deductible) cent.” Nice one, Angela.

Money mistake #2: Treating your business like a hobby

Copywriter Rashida Tayabali has been in the writing game a long time – and says she’s good with money. “Despite that, I have made ALL the mistakes! The main one being treating my business like a hobby and not a business. Not paying myself, underquoting, not believing that I was a good copywriter, not putting tax away, or paying myself super!”

She says once she shifted her mindset to the fact that she was running a business and providing a value service, that changed everything. “I implemented Profit First this year, set up a funnel, invested in a good website and raised my prices (12 years later! Shocking!). I think like a business owner now, not a hobbyist. And I’m much more cautious about spending money in my business too.”

Money mistake #3: Not actually doing your taxes (for years)

Ignoring her taxes (for her main job and freelancing on the side), was Melanie Mahoney’s biggest money mistake.

ignoring your taxes armadillo rolling into a ball
If I roll into a ball I’ll forget how much I owe the ATO

“When I eventually bit the bullet and did a few years of taxes at once I was VERY surprised to learn I didn’t need to sell a kidney to pay it all back,” she remembers.

“I haven’t been late for tax time since then! I set aside the right amount after each job I do. I don’t ever want to take money from my “savings” to pay the ATO ever again.”

Money mistake #4: Not applying a ‘profit first’ system

The biggest money blunder for marketer, podcaster and writer Anf Chansamooth? “I ran my business for 3 years without applying ‘profit first’ system,” he says. [Profit First is an accounting method that prioritises your profit. You put set aside a percentage of profit first, and then determine how many expenses you can afford.]

“These days, I’m factoring in a healthy profit margin into all offerings, and that’s meant my business is more sustainable – and my wife isn’t shouting at me as much!” says Anf.

Money mistake #5: Only charging for writing (and nothing else)

Writer Sophia Auld‘s biggest financial blunder was to believe she could only charge for the actual writing she did.

money mistakes and empty pockets
When you don’t charge for everything you do… you end up broke!

“As a result, I was giving away hours of work for free – all the scoping, briefing, ideation, client calls, brain-picking and so on. Plus, as a recovering people-pleaser, I’d let scope creep slide – but secretly simmer and resent it, which doesn’t encourage your best work! This meant I was working for a low hourly rate and not getting paid for some of the most important parts of a writing project.”

How did she turn things around? “I realised the writing part can sometimes take way less than the other bits, and [those are] worth charging for. Pricing that covers time for getting a strong handle on scope, a great brief, early feedback etc allows me to do my best work and ultimately deliver a better product, which helps keep everyone happy.”

Money mistake #6: Too much Mr Nice Guy (or Girl)

Medical writer Surrinder Paul Singh says playing the ‘nice guy’ all the time seriously impacted his finances in the beginning when he moved from medicine to writing. “I’d let invoices get paid late, I was afraid to ask for a rate rise, I did unpaid tests to try and potentially attract a new client and then just be completely ghosted,” he says.

And while it’s still a ‘rough landscape’ for him at times, he says he’s become more proactive since those early days. “I still have those moments where I know I should be more assertive… but I [am] more confident saying that payment is overdue or state that no employee should be spending their day writing for free, especially when I already have a portfolio/website up and running.”

Money mistake #7: Not paying regular tax instalments

We all make money mistakes but coach, speaker and writer Emma Lovell says her biggest was to not make regular tax instalments.

“I learned the hard way! I got an $8000 tax bill about 6 years ago and I felt so so ashamed. It actually took my psychologist to advise me that getting an unexpected tax bill means that my business was actually going well! So well that I hadn’t foreseen how much tax would be due as a result.”

Emma got her head around payment plans which she says was really helpful to manage her cash flow. “I also went to quarterly instalments. I’m now excited to pay tax because it means my business is going well!”

Money mistake #8: Sticking with the wrong payment model

For marketer Claire Chow, becoming trapped in the freelance mindset of hourly rates became her financial bugbear. “I just couldn’t get my head around retainers,” she remembers.

money mistake big mistake huge the office clip
Not choosing the right payment model? Big mistake. Huge.

How did she change things? “I invested in a coaching session which completely turned my world upside down. I have clear offerings and packages (not entirely retainers) with clear value and am starting to implement these into my business.”

Money mistake #9: Undercharging

Starting out, we all want to get clients and get a few runs on the board – right? And sometimes, we think the way to do that is to drastically cut down on the quote. (Yes, it can get you the client, but with a healthy dose of resentment thrown in for good measure).

Lynne Testoni, who’s been working for herself for 8 years now, was not immune. “I definitely undercharged in the beginning, but I know my internal rates now and what I need to earn,” she says. (So much so, that she’s even done a quoting masterclass for us teaching other people how to earn the big bucks!)

Others such as content creator Carly Jacobs also fell prey to the undercharging trap. “Not putting up my rates for years was my biggest mistake,” she adds. 

Were you nodding along to these? Got anything to add? Feel free to share a money mistake you’ve made as a freelancer in the comments!

Rachel Smith

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