How I Stopped Freaking Out About Money As A Solopreneur

When you run your own business, you either love making money or you hate it.

Maybe you love the excitement of making a sale and seeing the money coming in, or maybe to you money feels like a necessary evil. Either way, there are probably times along the way in your solopreneur journey when money starts to freak you out. When you’re not making enough. When you’re making more than you expected. When you have no idea how to manage your finances. When you’re afraid the work will stop coming in.

I know exactly how you feel.

I used to have a terrible relationship with money. I was in debt before I even turned 20, I had no concept of what it meant to truly live within my means, and I would recklessly spend come payday with no real thought given to the consequences to come. By the time I got myself together, debt free and starting from scratch all over again, my relationship with money had really changed. Money started to scare me. I was afraid that I would fall back into old habits again, and that I had absolutely no idea how to take control and manage my finances in a way that worked for me.

When you’re running a business and being boss, there’s no time to freak out about money.

Freaking out about money as a solopreneur when you’re first getting started is a given. Being in charge of your own paycheque is absolutely petrifying, and giving yourself permission to go out there into the world and charge for your services or products is seriously scary stuff. It’s taken me almost a year to full take control of my finances as a creative business owner. But I now no longer feel trapped in a feast and famine cycle, I’m able to make a sustainable living from my work, and I’m no longer overwhelmed by the fear that I won’t be able to provide for myself in the months to come. Here's why:

1. I know what I need to make to sustain my life and my business

I know how much I need each month to pay rent and bills, plus cover food, petrol, and other personal expenses. I also know how much I need each month to cover business expenses, tax, and everything else I need behind-the-scenes to keep my business moving forward. Knowing these numbers alleviates so much anxiety each month, as I know my bottom line and what I need to make ends meet and feel stable along the way. 

Takeaway for you:

  • Know how much you need to cover your personal expenses each month (rent, bills, food, petrol, phone bill, etc). That's your baseline
  • Know how much you'd like each month as extra to cover any travel, additional personal spending, etc. This amount plus your baseline amount can be your target monthly wage
  • Know your business expenses and how much you want/need to put aside each month towards tax and future business investments. This amount plus your target monthly wage (or your baseline amount - it's up to you) is the minimum amount you want to make each month from your business
  • Have two separate bank accounts: an account for business, and account for personal. Pay yourself a wage each month (don't know how much to pay yourself? Either pay yourself your target monthly income if your business allows, or work out your average earnings from the past 6-12 months and pay yourself that, minus tax and business expenses)

2. I know my numbers inside and out each month

I know what's coming in and I know what's going out at all times. I've found that this is the best way to feel in control of your finances as a business owner, as then there's no surprises come the end of the month. You can keep it simple with a spreadsheet that you manually update, or you can use online accountancy software like Freshbooks or Xero. If you don't know your numbers inside and out each month, and instead you're just spending as you go and taking expenses out as they arise, you can't have a clear picture of what's happening financially behind the scenes. You may find you're earning less than you thought, or you may find that you're actually bringing in more than you accounted for. Either way, it's so much better to know as then you can actually do something with that information instead of just winging it along the way.

Takeaway for you:

  • Get a bookkeeping system in place
  • Update it every time you earn and every time you spend in your business
  • Track your income every month, quarter, and year: set financial goals in your business and keep yourself accountable to them
  • Don't freak out if things aren't looking how you want them too, instead get smart and strategic in your business and do the work it takes to get to where you want to be

3. I save

Savings without a doubt help me sleep better at night. Being as financially stable as possible is how we can build a life of fulfilment and freedom along the way; knowing there's something there for as and when I need it allows me to feel stable financially in both my business and my life. 

Takeaway for you:

  • Know what role you want your savings to play: is it living costs and expenses saved for X amount of months in advance? Is it a rainy day fund? Are you saving for something long term - for example a mortgage deposit or maybe a big business investment? We're only motivated to save when there's a purpose behind it
  • Know your target monthly income (baseline + extras + business expenses), so when you earn above that you can see what's available to be saved 
  • Have separate savings accounts for business and life: keeping what you've saved for taxes and future business investments separate to what you're saving for buying a house/travel/emergency fund is the best way to manage it all and avoid feeling like you're taking away from your business when you're making big life purchases, and visa versa when you're paying taxes or investing in your business

So if you’re freaking out about money right now? Take control:

  1. Know your numbers
  2. Get a spreadsheet and track your income and expenses each month
  3. Don’t forget to put aside for tax
  4. Live within your means
  5. Don’t define your self worth by how much you earn
  6. Save

To finish...

As solopreneuers, it's our job to do what it is we need to do to sustain ourselves financially. Sometimes that may look like a part time day job on the side, or downsizing and cutting costs, but it always looks like showing up and just doing the work it takes to make big and beautiful things happen with our work and our lives. The more you can take control of your finances, the less freaked out you will feel along the way.

Letting the fear consume you won't get you anywhere, but getting on top of your money matters, figuring out the systems that you need to put in place, and doing the work it takes to make things happen is how you can feel financially stable and stop freaking out along the way.

What freaks you out the most when it comes to managing money as a solopreneuer?