Learning to distinguish an RRSP from a TFSA at the advanced age of 35

Category: Freelancing


I feel under a lot of pressure right now.

To accomplish more in the same amount of time at my job-job.

To clock more billable hours as a freelancer.

To volunteer in class on a weekly basis in my children’s school.

To put aside as much money as I can a month, and not let impatience for an immediate improvement in my living environment lead me astray, i.e., to IKEA for a quick fix, when what I really want is money in the bank for a down payment, not a new accent pillow to temporarily brighten up the living room.

To continue to practice my newfound financial discipline, but to not be too hard on myself when I make mistakes. This week, I paid in cash for a new bed, not realizing that I had broken one of my newly adopted rules: keep the exorbitant $3500 minimum required by TD Canada Trust to avoid incurring bank fees. For a few short harried hours last Sunday, my account fell $50 below the critical amount. Will I have to pay the fees? I’ve contacted the bank, but it remains to be seen just how hard of a line they are going to draw.

Basically, in the last year, I became more ambitious. I realized that I needed to focus more on my career and learn how to manage my money. But balancing these goals with parenting is occasionally exhausting.

I have been fantasizing about meeting with a career coach, someone who could help me sort out my priorities, so that I can keep them clearly in mind, when things get hectic, as when one child needs a lift to hockey; the other, to figure skating; and, there’s that potential client, waiting for a quote.

You know how they say that you don’t really learn things until you’ve experienced them for yourself. I’ve read a million articles on how how hard it is for mothers of school-aged children to achieve a work-life balance. But it’s as though I’m only just discovering how true this is by striving for it myself. All words of wisdom, welcome.


How I learned to manage my cash flow

One of the main reasons I got into financial trouble in the first place is that as a freelancer I had a variable income that I didn’t know how to manage. I would think of money as mine as soon as my work on any given project was completed. But sometimes the cheque wouldn’t come for six, eight, ten weeks. Sometimes the cheque wouldn’t come for years, as in the case of one rather major client who unfortunately declared bankruptcy after having hired me for four weeks straight.  An entire month!

I got into the bad habit of happily, naively borrowing from my line of credit for the amount coming to me, secure in the knowledge that I was “owed” money, even if I didn’t quite have it in my possession yet.

This is a very backwards way of doing things.

In other words, don’t try it at home!

Since taking control of my finances, one of my goals has been to learn how to successfully manage my cash flow.

Here are some tips that have helped me so far.

  1. Declare a temporary moratorium on all non-essential spending. This will re-set your financial clock.
  2. Don’t buy anything until you have the cash in hand.
  3. Figure out how much money you need to make, and try to make it. Freelancers often struggle with how much to ask for as pay. This is a good way of figuring it out! What do you need to live and how many hours are there in a day?
  4. Offer incentives to clients who pay early.
  5. Ask for a deposit on large contracts.
  6. Remember that it is possible to pay for some expenses such as insurance or gym membership in instalments, even if this option isn’t advertised. For example, I have a year-long membership at a yoga studio, which translates into the lowest possible amount per month. It’s advertised as being payable  in one lump sum, but I pay for it in monthly instalments. When I renewed recently, the person at the cash couldn’t believe what a good deal I was getting, comparably. Sometimes all you have to do is ask!
What tips have helped you get a handle on your cash flow, freelancers or not?