Succulent closeup

Five cardinal money rules of freelancing

By Anne Sasso

Forget New Year's. The fall is a perfect time to make resolutions and start sticking to them. We're business people, dammit, and following these five simple money rules shows we mean business. They'll also help us get paid faster, smooth out the boom-bust cash-flow cycle that comes with freelancing, protect us from IRS goons, and ensure that we're not shuffling around propped on a ratty shopping cart and mumbling about embargoes when we retire.

Roadsign reading "money"

1. Invoice as soon as the job is done

Don't wait until some nebulous "later," the end of the month or, gasp, when you feel like it. It's far too easy to forget the task. Rather, think of it this way: the job isn't done until you invoice — you can't cross it off your to-do list until that form is speeding its way toward your editor or a client's Accounts Payable department.

The sooner you invoice, the sooner you'll get paid. It helps to keep cash flowing and forces your client to deal with payment while the details are still fresh (and they're still solvent).

2. Cash checks as soon as you get them

This is just good all-round financial hygiene. With mobile banking apps there's no excuse for letting a check languish in some soon-to-be-forgotten pile or corner of your apartment. Snap a pic, send it to your online account, what could be easier? Well, direct deposit is indeed easier (and an option worth pursuing if you do enough work for a particular outlet or client). If you don't have a smartphone or your quaint little bank doesn't do apps, consider the cost of postage or the gas required to drive to the ATM to be your tax for living in the 20th century.

I don't have the data to argue for causation and my N is pretty low but I've noticed a correlation between people who don't cash checks within a week or so of receiving them and those who complain of cash flow woes. Just sayin'.

3. Save for retirement

There is no money fairy waiting to bail you out when you reach retirement age. And the prospect of trying to survive on Social Security is far more frightening than any zombie apocalypse. Saving for retirement is hard. It's short-term pain for long-term gain. Sure, you could get hit by a car tomorrow and die (and perhaps you'd be glad in hindsight that you were wearing those cute new boots or that ne plus ultra smartwatch) but most of us will need those retirement savings one day. (For tips on saving for retirement, check out Emily Gertz's and my Minding the Business chapter on solvent freelancing in the The Science Writers' Handbook).

4. Track your time

Oh, I know, it takes away from the whole starry-eyed romance of the writerly life. Get over it. It's the only way that you'll be able to tell if you're making an above-burger-pushing wage or not. Once you have the data, you can better decide whether to accept similar projects or fine-tune the mix of assignments you want to stay solvent. You'll also have the intel you need to estimate project fees for any non-journalism side jobs that come your way.

Use a spreadsheet or software to log your time spent on projects — and think like a lawyer, meaning every conversation and email is potentially billable time.

5. Don't mix business with pleasure

Open a separate bank account and credit card to go with your freelance business. Then use them. Some business credit cards give you cash-back breaks on business items, including office supplies, mobile plans and gas. Sure it's only 1% to 5% but those dollars can add up to a lot of caramel macchiatos after you retire. (Remember, you're saving for that, right?) Just make sure to get a low-interest-rate, no-fee card. And pay off your balance each month. Don't make me go all Suze Orman on you — if you can't pay the balance you shouldn't be buying it. Period.

Separate accounts and cards give you more cred with the IRS should you ever have a problem. They ensure that your personal expenses don't get mixed in with business ones. And at tax time the statements provide a backup in case you forgot a deductible expense.

Anne Sasso covers global business, energy, metals, mining, petrochemical, fertilizer and logistics markets. She provides analysis and commercial intelligence to corporate clients.

Image credit: 401(K) 2013 via Flickr/Creative Commons

Image credit: Pixabay

September 6, 2013

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