This post is sponsored by Intuit Turbo.
Peach and I sat down the other night to discuss our 2018 individual and joint financial goals. We’re getting married this year, so it’s the first time we’re truly looking at our finances from the perspective of being a team as opposed to two individuals who live in the same home, share a dog, but don’t have joint bank accounts.
I felt nervous to share my goals with Peach because one still brings a flush of embarrassment to my cheeks.
“In 2018, I really need to be better at budgeting my money,” I said in a rush, as if I hoped he wouldn’t completely hear my confession.
“What?” Peach said, “You do so well with your money.”
“I did when I had a steady income, but last year I kept raiding my savings to pay bills while waiting for freelancer checks to come. I don’t want to have to keep doing that this year,” I admitted. “Plus, I have some really high savings goals that I won’t be able to hit unless each penny is accounted for.”
It’s true, I was terrible at budgeting my money last year.
2017 was my first year living on the variable income of a freelancer. Prior to 2017, I held a full-time job and had a side-hustle. Since I’ve never carried debt, all of the my side hustle money went directly into savings or investments, and I still saved a decent amount of my regular paycheck as well.
I knew becoming self-employed would mean a significant change in my financial life, but two problems quickly presented themselves:
Problem #1: Money you’re owed doesn’t count
Any fellow freelancer reading this can relate, it may seem like you’re earning a lot on paper in a given month, but it could take 30, 60, or even 90 days for that money to actually land in your bank account. Theoretically, I was living within my means, but that money wasn’t actually in my account yet.
I pulled money out of my savings account more than I care to admit to cover a shortfall while waiting on a paycheck. To make myself feel better, I always made a note to pay myself back when I got the anticipated paycheck, and, with one exception, I did. But this cycle induced a lot of anxiety, not only because I was technically living beyond my means (a sent invoice isn’t money and it’s not real money until it’s actually in the bank) but because I’m a personal finance expert. I make my living giving other people financial advice. Yet, here I was struggling to figure out how to switch my previously great budgeting style to accommodate my new life transition. You can imagine the levels of frustration, self-doubt, and imposter syndrome that began to sneak in telling me I was a failure and a fraud.
Problem #2: I had six-figure salary taste on an unpredictable income
After starting at around $23,000 in income my first year in New York in 2011, I’d progressed to earning just shy of $100,000 in 2016. My full-time job paid $70,000 and I grossed around $30,000 in side hustle gigs.
Then, after much deliberation, I made the switch to being self-employed.
Suddenly, all my money came from what had previously been the side hustle gigs – and I had no clue in January of 2017 how much I would be grossing that year. And yet, I was still making choices and spending as though I knew I’d be making somewhere between $70,000 and $100,000.
Admittedly, $70,000 was my goal. I wanted my first year as a self-employed person to gross at least $70,000 because it’s how much I earned at my old job. This metric would prove to me that I’d made the right decision when I left. (*Spoiler: I did gross more than $70,000 in 2017*)
It’s time to (finally) be honest
Telling Peach, and now admitting the situation to you, is my way of holding myself accountable in 2018. I’m going back to the basics and starting January by tracking every penny I spend. Peach and I are also both creating budgets that detail exactly the bare minimum we need for our monthly living expenses (he has student loans and I run my own business, so they aren’t all the same expenses) plus our savings goals. Then each month I can determine my discretionary income based on the freelance money that has actually hit my account instead of using about what I’ve earned on paper.
We all make mistakes with our money, especially as life changes, and we need to adapt from what has worked in years past to our new situations.
Helping you start your own #RealMoneyTalk
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Remember — You’re not alone in trying to better your financial life
One of my goals is to help people take the stigma out of talking about money. I’m joining with Turbo to help others talk more openly about money by sharing my own story on social media. Join us by sharing your biggest money failures or triumphs using #RealMoneyTalk on Twitter, Instagram, and Facebook. You can also read other’s money stories here.