Freelancer’s Survival Guide, Money, Part One

Freelancer's Survival Guide On Writing


The Freelancer’s Survival Guide: Money, Part One

Kristine Kathryn Rusch

As you could probably tell if you’ve been reading this Guide since I started it, I’ve been putting off this topic. I’ve been putting it off for several reasons. Money is a difficult topic to discuss. Most people don’t want to think about it. Most of us don’t know how to discuss it. Most of us consider financial information private—even more private than our sex lives (and you know how you are, you TMI people, you).

And yet money is probably the most important topic of all for freelancers.

Because money—the lack of it or, oddly enough, an abundance of it—is the primary reason most freelance businesses fail.

I am going to spend at least two more posts on financial issues, maybe three, depending on what I need to discuss.

This is a preliminary post, mostly to get you thinking about your own financial preconceptions.

Consider this: In the United States, we insist on remedial skills for our children. At minimum, we want them to read at a high school level, to do basic algebra, and to write well enough to communicate their thoughts. They often don’t achieve these minimums, which is why every president in my lifetime has had some proposal for “fixing” education.

No matter how education is fixed—and each generation has things it must put up with from its elders—it always fails in one big important area.

American public schools do not teach money management. Some private schools do. Colleges occasionally do in their business schools. But oddly, I think, most colleges expect the business majors to have basic money management skills—and most of them do not.

Whenever Dean and I teach the Master Class, a class designed for professional writers who have plateaued in their careers, we begin with a financial quiz. We want to make certain that we use terms everyone understands.

The classes, composed of already established professionals, have an average age of 40. The quiz has ten questions—basic questions such as “define net worth” and “explain cash flow.”

Most of the students fail. They get one or two questions right, and that’s it.

One or two.

These are fully functional adults, many with day jobs. Most have children. Most have lived away from their parents and have managed their own finances since they were eighteen years old.

The public school’s original rationale for failing to teach money management was that kids should learn how to handle money at home. Some kids do. Some get allowances to buy what they want, and when the money’s gone, it’s gone. Some learn how to save, either with an account or with a piggy bank. Some (if Kiplinger’s is to be believed) even manage their own stock portfolios—or did, before the debacle last fall.

Most of us, however, got haphazard money management training at home. My ex-husband, for example, got an allowance. But when it ran out, his mother would just hand him a $20 to cover whatever he needed. By the time I met him, he didn’t realize that money was a finite commodity.

Even with that problem, however, he was better off than I was. My parents never discussed money. They encouraged fiscal responsibility, since they were both products of the Depression, and I do remember the day my mother took me to the bank to open my own savings account.

But when the school sent home a form for family information, my father refused to fill out the money sections. He wouldn’t tell anyone what he earned. One of my grade school teachers made me bring the form back to my father and ask him again to fill it out.

My father scrawled “None of your damned business” across the form, and handed it back to me. I didn’t find out what the man earned until he died, and my siblings and I made certain my mother had enough money to live on. She had more than enough—she was happy to tell us how much—and I was a bit stunned.

By the time I was thirty, I was out-earning my father. I had always thought my parents rich. My friends thought them rich. My parents just pretended very, very well.

(The reason we didn’t have a second home at the lake like my wealthier friends [my mother told me when I asked] was because we didn’t want one, not because we couldn’t afford one. In fact, I never once heard my parents say that we couldn’t afford something. My parents left me with the impression that we could afford everything. We just didn’t want very much.)

Our perceptions about money—what we learned from our parents, our grandparents, our friends, and the world around us—have an impact on how we handle money. Most of us just do what we were taught. We work 9 to 5, have a “secure” job, and pay our bills on time. If we have investments, we hire someone to take care of them for us because (we were taught) it takes specialized knowledge to handle money.

Money management has become an arcane science in American society. We all get by, but only a few hold the keys to the kingdom.

We’ve seen, in the last six months, what giving the keys to that very important kingdom to people with specialized knowledge brings. It brings economic ruin and chaos.

I’m smart about money. I still make mistakes (jeez, do I), but I’m a very, very good money manager. If I’m not paying attention, I’ll tell you I was always this way.

But I wasn’t.

I learned about money from the school of hard, hard, hard knocks.

Let me give you a few examples.

I married the first time at nineteen. I had never lived on my own. You’ve already heard about my parents’ magical approach to money. I spent my eighteenth year in a private college on a full scholarship—one that paid for room, board, expenses, and tuition. I didn’t want for anything that year.

I gave it all up for love. So romantic. (So dumb. My favorite prof said, “Marry him after you graduate.” My divorced older sister said, “If you want to sleep with him, sleep with him, for god’s sake. You don’t need to be married for that.” In my nineteen-year-old wisdom, I thought she was being cynical. I thought my professor was “liberal.” If only I had listened….)

The minister who performed the ceremony gave all of the starry-eyed young couples a questionnaire of his own devising. It went on for pages, and tried to ferret out compatibility.

He called us into his office in two months before the ceremony, and said he had never seen such a compatible couple. Our answers matched on 80% of the questions.

The only area we didn’t match on at all was money. We disagreed on every single question.

He said, gently, that this could be a serious problem in the relationship, and we might want to rethink the marriage. He thought some counseling on financial issues would be in order before we said I do.

We disagreed with him.

We married two months later.

We divorced seven years later.

The main area of contention? Money. Not that we fought. We didn’t. We just mismanaged our way into marital hell.

But the first steps in my financial education came in those years. For example, I was raised traditionally. I was taught that the man handled the financial affairs in the family, so my new husband handled the money. Until two years in, when we started bouncing checks. I learned that my ex balanced the checkbook “in his head.” He never wrote anything down.

I spent Christmas through New Year’s that year, going over each and every bank statement, and balancing them by hand. I’m dyslexic. Sometimes it took me four and five hours per statement, and I had 24 of them to go over.

I couldn’t find $200. It had completely vanished. So on the first banking day of the new year, I went to the bank with all my statements, and explained my problem.

The bank president took me aside (scaring the crap out of me) and offered to put the $200 back into my account. It turned out that an employee had embezzled from every mismanaged account she could find (ours being one of them), and the bank was reimbursing to avoid the information being made public. I had to sign a confidentiality agreement.

I could’ve blown the whistle on the whole deal. There would’ve been court cases and arrests and lots of publicity.

I didn’t blow any whistle. I signed the agreement. We needed that $200.

Lesson 1: If you want your money handled well, do it yourself

Lesson 2: People with fiduciary responsibility embezzle. I was shocked. Shocked!

[Note: this would not be the last time that someone embezzled from me. Sometimes you need to be hit over the head a few times before the lesson sinks in.]

Lesson 3: Desperate people can be bought off.

I became tight with money. I had leaks, though. I bought books as if I was wealthy. I ate out even when I was broke. I had to learn to budget for those things. More on that later.

As for my ex, we remained married for another five years. During that time we started and lost a business because we didn’t know how to handle money (more on that later too). After that, we borrowed $500 from my parents so that my ex could take a class on finances. The class taught him to be a financial adviser.

The B student who never graduated from college. The man who balanced the checkbook in his head. That man took a two-week course at a hotel in Milwaukee, Wisconsin, so that he could work for a financial services firm, giving people financial advice and selling them securities.

I was appalled. I still am. My ex was (and probably still is) a good man. He had a great heart and really wanted to help people. He was also a great salesman.

But in those days, he was the last person to give anyone financial advice.

To his credit, he knew it. He read everything he could about finances and he bought one of the first computer games, one that simulated the stock market. We learned from that game how risky stock investments were.

Unlike most couples with one spouse working at the financial services firm, we didn’t buy any of the securities my ex sold. We knew we didn’t understand them well enough.

Lesson 4: The “experts” might know less about finances than you do.

In those years, as I realized I knew nothing about money at all, I did what I always do. I researched it. I became a business reporter because I could go to “experts” and ask them money questions—and get paid for it.

For nearly five years, I wrote articles on movers, shakers, and financial whiz kids for publications from In Business to Entrepreneur. I did not write financial advice columns. I didn’t feel comfortable advising people about something I barely understood. I was attempting to get my own financial education, one expert at a time, and I was managing to get paid for it.

At the time, I did not make the connection between the experts I interviewed and my ex-husband, the financial services expert. I figured the experts I interviewed knew more about money than me and my ex.

Now I wonder exactly how much smoke got blown up my ass in those years. Still, my financial education was (finally) beginning.

I do owe my ex and his money management skills a great debt, however. He found two thousand dollars in scholarships and other donations to get me to Clarion Writers Workshop in 1985, and I will be forever grateful.

At Clarion, Joe and Gay Haldeman gave a three-hour lecture on money and business. In my six weeks at Clarion, those three hours were the only mention of the one thing that makes or breaks a writer’s career. Joe and Gay filled those three hours with great advice. They had a long list of dos and don’ts.

I took copious notes. I listened attentively.

Then, in the next few years, I proceeded to do every single financial thing that they said to avoid.

The one I remember the most: Don’t pay your bills with your credit cards in anticipation of a big check. Gay said that, and she may have actually shaken a finger at us as she did so. I do remember the serious frown on her face as she spoke.

Because…five years later, I paid bills with my credit card in anticipation of a big check. And when I found myself in serious financial hot water because of it, that frown on Gay’s face came back to me.

Over and over and over again.

I wasn’t being perverse. I wasn’t trying to prove Joe and Gay wrong. I wasn’t trying to ignore their advice.

The problem is that you can tell someone not to do something, and they will remember that advice. After they’ve made the mistake themselves.

Dean and I relearned that lesson when we taught the first Master Class in 1999. We told students not to make the same mistakes we did. We delineated what those mistakes were. In the intervening years, each student told us that they made those mistakes, and wished they had listened to us, just like I wished I had listened to Joe and Gay.

Dean and I tried to figure out how to give students actual experience with these problems without having the real-life consequences. Subsequent Master Classes have had a role-playing game that we call (unoriginally) the Game, designed to mimic the business conditions of a freelance life. Dean, Loren Coleman, and I designed it. Loren, a well known writer who also owns Catalyst Games, made it work. (He’s our assistant at the Master Class; we couldn’t do it without him.)

Now students tell us they wished they’d listened, but they do so far less. More often they tell us the mistakes they avoided because they “made” those mistakes at the Master Class.

I wish I could find a way to have all of you make the mistakes in a pretend environment. Because I know so many of you will read these next few posts, all on money and finances, and then remember the lessons after you’ve made the mistakes.

The only thing I can tell you is this: We learn by making mistakes.

I would not be good with money if I hadn’t had the experiences listed above. And some others that I will discuss. Two failed businesses, several successful businesses. Living below the poverty line for two years straight and yet somehow managing to survive. Living well above the poverty line and not being able to pay my bills for the first time in my life.

Learning that making money was only the first step. Financial success did not mean, as a Clarion friend of mine once said, “becoming rich and never having to work again.” It meant learning how to live within my means—and figuring out what those means really were.

Learning about cash flow, and liquidity, and the difference between investment and savings. Learning how to differentiate uncertainty and risk. Learning how to illusive security really and truly is.

Some of this came through life lessons. Some through reading. Some through watching and avoiding the mistakes of others.

I wish I had a copy of that quiz the minister gave me and my ex-husband. I’d post it here right now. Because you and your significant other, the person who will live or who is living this freelance life with you, need to take a quiz just like it.

If you haven’t already figured out your differences about money management, you need to learn it. You need to figure out your own hidden preconceptions about finances. You need to learn exactly what you believe about money and what your significant other believes.

You also need to figure out—and this is extremely important—what your financial end game is.

Would you be happy making $100,000 year in and year out? $50,000? $500,000?

Or is there no dollar limit on your happiness? Is your financial end game tied to things instead—a paid-off house, a car you own, enough money to send the kids to college, and enough to maintain a comfortable (by your definition) lifestyle.

Or do you want a 24,000 square foot house like Dean Koontz just built?

Money doesn’t buy happiness, but money can get in the way of happiness. You need to figure out all of this stuff, preferably before you go freelance. But if you’re one of my readers who already freelances, then you should stop and figure out what your financial desires are.

Because they motivate you.

Let me give you one more personal example. In 1985, at Clarion, I would have agreed with my friend: I wanted to be rich and never have to work again.

Now I know that if I were filthy rich (J.K. Rowling rich), I would still work. I can’t not work. I love what I do, and I’d do it even if I never had to make another dime. I’d be like Nora Roberts, writing several books a year, whether my fans wanted to read them or not.

Several of my friends would quit work if they achieved their financial dreams. They’d manage their money or tour the world or spend time with their grandchildren, like one of my favorite romance writers, LaVyrle Spencer, who retired in her sixties to spend her remaining years with her family.

You need to figure out what you want out of life, out of your freelancing, and out of your finances. That’s the first step in this money discussion.

Figure it out by next week. And then we’ll talk some more.

You can now order either an e-book copy of the Guide or a trade paper copy of the Guide. It’s in slightly different format and has been organized, so that related topics are in an easily accessible place.

You can get the print version here.

For those of you who’d like to buy an ebook, here’s the Amazon link as well as the Barnes & Noble link. The e-book will also be available on all the other e-book sites. If you want it in your favorite format, and the book hasn’t yet been uploaded to your favorite site, try Smashwords. You’ll be able to download in a variety of e-book formats.

11 thoughts on “Freelancer’s Survival Guide, Money, Part One

  1. In my high school naivety, I thought that this (what you wrote above) is what they would show us in college: seven years and one diploma later, I’m here and still mostly clueless. How to market yourself as a business. I’m not mathematically gifted at all, my nine-year-old niece laughs when I have to pull out pen and paper to help her with homework, but I’m so willing to learn. Do you have any resources that you would recommend? I did a brief google search on small business marketing and all I found was the usual (marketing to the client, engage on social media, ect).

  2. There are a lot of aspiring freelancers out there who could use that game. As you yourself said, most people really don’t understand what managing your own money is going to entail when they strike out to be their own boss, and even those with a basic understanding of finances can end up making big mistakes.

    Is it something you could transform into a board or card game? I ask because I recently discovered a DIY company called The Game Crafter ( which allows individuals to develop and sell physical games without having to launch their own business for doing so. When I was reading your post, I immediately thought to myself that if you could utilize such a company to sell the game you’ve devised, you might save a lot of prospective freelancers a lot of hard-earned heartache, and make a little extra money while you’re at it.

    I & my husband are accustomed to being self-employed (as well as to starting businesses), but I know a *lot* of newly-published or soon-to-be published authors who want to write full-time for a living, and I would love to be able to point them to a resource like that game. If you do decide to get it published in some form, please let me know so I can offer to be a beta-player, or at the very least let others know about it.

    1. Thanks, Audrey, for the offer. One of the Game’s designers owns a major gaming company. We’ve talked about marketing the Game for years, but the problem is that 90% of what happens seems random. Only with the instructors explaining why something happened does the Game have any value. So far none of us, including several Gamers, have figured out how to bottle that part of the Game. When (if?) we do, we’ll market it.

  3. It sounds fantastic, and is a great concept. People learn best when they’re actively participating in the learning. I apologize for not being clear in my post – I work in eLearning. It seems to me there’s an opportunity to leverage what you do in your workshop in an online environment (thinking like a businesswoman – in a fee-to-play kind of setting, ala iPhone app business models of very low cost and/or some content free, additional content available for a fee.)

  4. Wonderful post, Kris, thank you for making it available.

    I wish I could save everyone from the stress I had in my early 20s with a stratospheric credit card bill. My frustration always came back to this – I’m a smart woman. How did I get myself into this mess?

    You’re onto something in your post here about wanting to provide a game-like experience to freelancers (both those who want to go into the freelance environment, and those already in it.) I would love to talk more with you about it – am also going to reach out to Loren Coleman. Loads to think about.

    1. We do an actual role playing game for writers, Karen. Dean, Loren, and I invented it and are constantly tinkering with it. We provide it for writers at various workshops to teach them how the profession works. It’s a good experience, at least they say it is.

  5. Forwarding this to my husband. He is constantly studying finances and looking to keep us going strong. Even though I complain soemtimes that he is a penny-pincher, I honestly can say he’s much better at managing the money than I am.

  6. Hi Kris,
    Great and thank you for this guide. I do have one question that no money management article thus far has answered: what’s your money advice for security-loving tightwads like me who’ve already prioritized paying off the mortgage and car, getting disability insurance, RRSPs, education plans, etc.? I’ve recently incorporated as well. I’m not looking for financial advice as much as mental advice.

    I think I’m supposed to be living the happily-ever-after financial part, and I am slowly starting to treat myself instead of always saving for a rainy day, but I’m sure there’s more advice for people who’ve spent their whole lives suppressing their “wants.”

    This may apply to a freelancer’s life in the form of the “golden handcuffs” Scott Carter mentioned: I may never quit my day job because I love the money as well as security and cachet. Which may mean my writing career keeps at the small potatoes level until I retire, although I sincerely hope not.

  7. Excellent as usual. I learned a lot about business and money when I started freelancing and I’m still learning–and making mistakes. And I wrote a lot for about personal finance, which was a decent education. And I still have to remind myself about the difference between “want” and “need.”

Leave a Reply

Your email address will not be published. Required fields are marked *