money confidence

How to Build Money Confidence as a Service-based Business Owner

15 October 2020 | by Gina Lucia

Freelance and service-based business owners need to wear many hats. We have to find work, keep up with that work, market our own businesses, keep up with training, and so much more.

Throw into the mix, managing our own business finances, and things can get pretty overwhelming. It doesn’t have to be though.

So in this article, I’m going to share with you seven of my best tips on how to gain money confidence as a freelancer. From converting sales to managing where your money is going.

Building money confidence

Visual learner? Watch the video:

Tip #1: Get a business bank account

When I first started with my freelance business, I kept all my money in one account. I had my business incomings and outgoings completely mixed up, with my general life expenses.

I put off getting a business account for years, based on two things:

  1. I didn’t want to pay a bank service charge for accessing my own money.
  2. I wasn’t earning much at the time, so I didn’t want a reminder of how little I was earning.

All this decision did though, was hold me back from fully grasping my business finances. I had no idea what was going out, and I was turning a blind eye to the little money that was coming in. I had absolutely no money confidence.

The idea that six pounds a month business bank account charge was too much for me to pay, should have been a big red flag that something needed to change. If I couldn’t afford £6 a month, something was very wrong with my business.

When I took the leap and got a business bank account, here’s what happened:

  • My mindset changed, and I felt more like a proper businesswoman. As silly as that sounds, it was true.
  • I could see what was going out and coming in, more clearly.
  • It made me realize that I needed to be more proactive with my business if I wanted to see results.

Tip #2: Track your income and expenditure manually

This may seem obvious, but tracking what comes in and out of your business, is truly valuable.

I struggled with the idea of managing my business finances for years because truly, I was scared of it.

Money mindset is always something I’ve struggled with. So, seeing how much I was spending in comparison to what I was earning, scared the crap out of me.

But, by not paying attention to the money I was spending in my business, I was stopping myself from progressing. If I couldn’t see how I was doing, how could I possibly know if I needed to acquire new work to help me out? Or if I had the spare money to invest?

Something changed for me one month when I decided to work on my money mindset. I decided to jump in at the deep end and stop manually recording my business finances, so I could truly see what was going on.

I signed up for Wave, which is free accounting software, you can use to manage the income and expenditure of your business. And, it also helps the taxes.

Wave accounting

I set a date in my calendar every single month, to manually input my income and expenditure into Wave. And, the great thing about Wave is that you can see all of this in the form of pie charts and graphs, so you can fully grasp how much you’re spending on your business each month.

It goes without saying that, although some months during this were painful. Over time it allowed me to get a better grasp on my business and take action, to make improvements going forward.

If you want to have money confidence, especially in your business. I highly recommend taking this step and tracking your income and expenditure manually.

Tip #3: Talk sales with confidence

The number one thing I struggled with when starting out freelancing, was talking about price and asking for the sale.

I believed people wanted to work with me because I was and still am, personable, honest, and kind. However, these traits only work to your advantage up until the point of asking for the sale and telling them your price.

I struggled so much with this part of the sales process, because like it or not, us freelances need to learn one very important skill, and that’s sales.

So, when working up to closing the deal, here are some of my tips and these come from an introvert.

Don’t beat around the bush.

A client knows you charge for your services. And, they also know at some point, you’re going to tell them how much it costs.

Don’t be shy and tell them with confidence. If you don’t, your body language and the words you use will show your lack of confidence, and then they’ll stop having confidence in you.

And then instead of saying, “What do you think?” Or, “Let me know if you’re interested.” Say, “Does that sound fair to you?” after you’ve given them your price.

Trust me, it’s very hard to say no to.

Tip #4: Send invoices with confidence

Believe it or not, the sales process doesn’t stop when they’ve agreed to work with you. You need to keep that confidence going when you send the invoice.

If you’re anything like me, you do 50% upfront and 50% on completion for new clients. This means the first invoice needs to be sent before you even start work.

money confidence invoice

So, here are my tips for sending invoices:

  • Send it with a welcome packet to soften the blow.
    • By sending your invoice with a welcome packet, you’re reminding your client why they chose to work with you and the value you’re going to provide. While also asking them to pay.
  • Use professional software.
    • I mentioned using Wave earlier, but I also use it to send my invoices. By using something like Wave, you make it easier for your client to pay you.
    • You can use templates and you can track everything, and then let Wave do all the work.
    • If you ever have trouble getting a client to pay you on time, software like Wave allows you to send reminders to clients so that they can pay on time. The best part? It comes from Wave and not you. So, you’re not doing the nagging, Wave is.

Tip #5: Put tax money away every month

I didn’t do this for years, and boy did I regret it. Instead of putting a percentage of my money away each month to pay for taxes, I completely ignored their existence. And then, when a letter came asking me to pay, I’d be completely frustrated, angry, and upset.

After all, all the money I thought I had was no longer mine.

When I decided to start putting a percentage of my money away each month in a separate account, all that money anxiety washed away.

No longer did I dread my taxes, because I was putting money away every month for them. And better yet, I was probably putting away too much, so any leftover money was a bonus.

Depending on where you live, check how much you need to put away each month for taxes, and then do it. You’ll thank me later, trust me.

Tip #6: Put money away each month for your pension

I’m not sure what it’s like where you live, but in the UK, self-employed people get a state pension. But, by the time you retire, the amount you get isn’t that much.

So while you’re working, I’d suggest getting a personal pension to top this up. Then, put an amount each month into the pension, depending on what you think you can afford. You can always change this amount, as you go.

money confidence pension

Essentially, by setting up a personal pension, you’re ensuring you have a financial future. Especially when you can’t necessarily control your state pension.

I’m not a financial advisor, so you’ll need to hire one or ask a knowledgeable friend or family member, to help you find the right personal pension for you.

Tip #7: Put an amount of money away each month for your nest egg

As freelancers, we can’t always control what happens to our work. Sometimes clients decide that they no longer need our help, or the world turns to pot.

So, to protect ourselves from such occasions, I recommend putting aside an amount of money each month, for your nest egg.

A nest egg, is simply a pot of money you keep aside, for the future. For your business, this will be reserved for such occasions:

  • Where clients stop working with you unexpectedly.
  • You have personal injuries that stop you from working.
  • Or something happens in your family.

By setting this up, you ensure you’re covered, because we don’t get sick pay or an employer to back us up.

I put away a certain amount of money each month for my nest egg, and I keep it separate from my business bank account.

To keep this, my tax money and other investments separated; I use Monzo and it’s Pots features.

Monzo pots

Monzo is an online bank, that’s designed for ease of use and has many features. In particular, I use it to separate my money out into pots. Monzo is free to use and makes managing money in this way, easy.

So tell me in the comments, do you have any tips to build money confidence as a freelancer, or service-based business owner?