Everything Was Fine

In August of 2019, I took the leap to become a full-time freelancer, with the unwavering support of my husband and close family and friends. I’m primarily a photographer here at Alice & Flore Studios, but I also do a bit of freelance writing and social media management. It’s been a wild ride, always fun and always stressful.

Enter: the COVID-19 pandemic.

Suddenly, everything is closed, everyone’s working from home, and those who can’t work from home are being laid off. The government is offering financial aid, mortgages are being deferred, and other decisions that could have a large and lasting economic impact are being weighed out. Small businesses are encouraging us to keep buying their goods. I’m praying that SOMEONE will book a photoshoot in the next two months, and oh, my church is closed. So, I can only pray from home.

Times are wild.

Here’s the premise: NO ONE WAS READY FOR THIS. This is not the “rainy day” we had in mind when it comes to our savings and financial position. I chose to use my background in business to compile tips and tricks that I find helpful during these uncertain times and even in certain ones. This blog post has been written in collaboration with my own in-house Winnipeg accountant, Chris Malkiewicz, who’s super awesome and handsome, and is the reason my heart pumps blood. You will be able to tell which words are his through the italicized style font.

I’m the looks, he’s the brains. Don’t let that degree fool you. (Just kidding!)

Know the Difference Between Receivables and Expected Income

A receivable is money you have a contractual right to. Things like your paycheque from an employer you’ve signed a contract with and are doing work for, or in the freelance world, the money you are owed for work you’ve ALREADY DONE. The freelance world is tricky to navigate in this fashion.

If I sign a contract with a client saying I’ll take pictures of their office for their social media, that money isn’t actually receivable until I’ve gone and taken the pictures. Until either, I do the work, or the client pays me in advance, I don’t really have a right to that money. In light of all this COVID-19 business, it’s important to note that you need to do the work to have a receivable. Unfortunately for many Canadians, if the business you’re working for shuts down, you can’t count on your paycheque, contract or not. Meanwhile, the expected income is the kind of money that you kinda/sorta hope is probably coming. Maybe you’ve booked some photo sessions, have scheduled meetings and see things coming your way - but you have no actual right to that money yet.

Neither one of these is tangible, real, dollar-bills-in-your-hand money - yet. So, it’s important to not get ahead of yourself in spending. This is honestly a problem that I have quite often and it’s been something that I need to work on. Putting a purchase or a dinner outing on my credit card because I’m pretty sure I have a photo shoot coming up. That’s really silly of me I need to be better at living off the money I can guarantee is in my bank account, or will be there in a matter of days, if not hours. That’s also one of the problems that economists are always talking about - Americans (and Canadians) are spending more money than they have. In fact, the Financial Post says per capita credit card debt in Canada could get as high as $4,465 by the end of 2020! (https://tinyurl.com/yx46yard) We all know the best practice is to pay off credit cards monthly, but unless you’re pulling in $60,000 a year, you’re not paying that amount off every month.

Stop Living Off Expected Income (and Receivables!)

Be strict with yourself and start seeing your expected income as goals to achieve - and work really hard to achieve them! There are months that I look at my calendar, look at all the possibilities and opportunities and think to myself, “Wow, this could really be awesome”. Then, I’m motivated to work even harder making it happen.

If your type of work requires you to rely on receivables, here are a few things that you can do to ensure ease of mind.

Ask for a deposit upfront on your goods or services to ensure that the work you start to do in preparation is being paid for. People often ask why I require a deposit with a booking, but in reality, 25% of the work that I do takes place before and in preparation for the photoshoot, so I’d like to ensure that I’m paid for my time.
Write up a contract. Ensure that your customer knows what’s expected of them and what they can expect from you. This includes things like cancellation policies and fee schedules.
Don’t spend so much! Simple, right? Nope. We’re constantly bombarded with advertisements, posts from Instagrammers showing how cool their lives are with all their stuff, and local entrepreneurs - just like us - that need to charge more for their products because of the increased overhead that comes from producing locally. I think a KEY thing to recognize is that portrayals on social media are almost always at least 4.56438 times more extravagant or cooler looking than real life (a completely made-up statistic by yours truly). Don’t be afraid about keeping up with the Jones’ of Instagram. Everyone’s putting the best side of them out there for the world to see. Live within your means. Which brings me to budgeting!

Start Budgeting

No matter what you’re doing, NOW IS THE TIME TO BUDGET. It’s never too early or too late to start a budget. 100% transparency, Chris and I are JUST getting to work on this now. We’ve been really stable for the last six months and still are - thank God! - but we realized that we never want to feel that uncertainty ever again. We’ve gotten started with EveryDollar, an app by Dave Ramsey and have simply gotten our receivables and expected expenses in order.

If you are interested in getting started with budgeting, check out these other great apps:

Mint is part of the Intuit family so it works nicely if you’re using QuickBooks for your small business!
You Need a Budget is a program that is based on the envelope method. They provide you with four rules for successful budgeting and offer a lot of great resources to help you get started!

A key part of budgeting is realizing where your priorities are. Separating your “wants” from your “needs”, and even farther separating your “wants” from your “OH MY GOSH I SUPER REALLY WANT THATs”.

Needs: food, water, shelter, phone bill. That’s pretty much it! Sure, you don’t need a phone to live, but let’s face it, it’s 2020 and everyone’s got a phone bill. After figuring how much money you have to spend on needs, list your wants in order of personal importance to you, starting with OMGs and ending with “meh”. Go down the list, allocating more money to things that are more important to you, and voila! Budget made!

Create that Emergency Fund

Once your budget is in place, you’ll no doubt have an Emergency Fund. (Repeat after me: “Yes, I will!”) Emergency Fund should be your #1 OMG. It’s an entire fund dedicated to when you go “OMG - I have no money!”. Remember, these are for ANYTHING of this nature. Job loss, global pandemic and everything in between. So, how much money do you really need in there? 3-6 months of income. That’s right, income. Not just your expenses. You want to be able to enjoy your life as normally as possible during this time so it’s good to ensure that you have enough money in there. You can also start to think about creating an emergency fund for your business if you have a lot of overhead costs. Be sure that at this time, and even in good times, you’re consuming at a rate you can afford.

One of the ways my husband and I are doing that is a Koho card. It’s a reloadable Visa card, which is awesome because it’s accepted anywhere that takes Visa, but it works like cash! So, after figuring out what we need to allocate to bills etc, we decided how much we can take as a weekly “fun fund” for things like spontaneous fast-food visits or nights out, and we load that amount onto the card. No more money on the card? No more spending for the week!

“Passion is what you do for yourself and purpose is what you do for others.”

— Unknown

Long Story Long

This pandemic has been a whirlwind of fear, sadness, relief and gratitude for me. I am grateful that I can safely work from home and grateful for the contracts that I’ve always picked up “just in case”. This pandemic has certainly been a wake-up call for Chris and I. We already had a good grasp on things but this situation opened our eyes to some harsher realities and things that we need to pay attention to.

You’re not alone in this.

Even if finances aren’t a problem for you right now, there might be a lot of uncertainties in your life. Take it easy, breathe and allow yourself to feel the feelings. Then, take time to make lists of what needs to be done right now, what you CAN do, and so on. You’ve got this. We got this.

If you’re struggling financially right now or scared of how to carry on from this, I’m leaving you my two personal favourite financial minds to chat with:

Josue Dubon, QAFP, B.Comm (Hons) Wealth Mentor with DesignWealth

Chris Malkiewicz - Staff Accountant with Fort Group Chartered Professional Accountants