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5 November 19
Reading time: 5 minutes
Like any freelancer, I was wondering when I was finally going to get paid. It had dragged on for weeks.
I was on the phone with a PA who was willing and able to lend a hand, pleading my story of boarding a plane to Fiji to get married. It appeared to be helping. Could they make the payment happen in time?
Many of you will be all too familiar with that uncertain feeling you get when you submit an invoice for work you’ve just accomplished. You’ve done a stellar job, the manager who ordered the work is happy as, and now you just want to get paid at hyperspeed.
When you’re just starting out contracting and money’s only flowing in fits and starts, submitting an invoice feels like you’re pitching your bill into a black hole – the machinations of some huge institution that may one day deem it somehow appropriate to actually compensate you for your blood, sweat and fears.
It feels so beyond our control.
Thankfully I finally found someone on the end of a phone line who could make sure my invoice was processed and paid out just in time for the wedding. It wasn’t long before I was poolside at a tiny island resort, happily married and marveling at the wisdom of honeymoons. What a great idea.
But how do we generally handle things beyond our control? When you’re an independent earner, just finding enough work in the first place can appear uncertain. It can seem like the world is something that “happens to us”, which impacts on our ability to plan for it. If we let it, that puts us on the road to becoming victims.
The trick is to keep your “controllables” more than your “uncontrollables” – to focus on those things we can influence and shape. You’ve got a lot more power and agency than you might think.
If you’re just getting started sorting out your finances and are not sure where to begin, we’ve come up with some key steps that will help you prioritise. Here are Sorted’s six steps to getting ahead financially:
When you’re self-employed, obviously you need to make sure to take care of taxes, and online platforms like Hnry can make this easier than ever to do. They’re also great at helping you funnel your money where you need it to – especially to smooth out the bumpy income that can come with contracting.
If you think about why the tax system works, why KiwiSaver works, it’s because the money is taken straight out of our pay before we can do something else with it. We get used to it not flowing through, and it gets taken care of behind the scenes.
The good news is we can use this same technique to get what we want as well. It’s called “paying yourself first” – which basically means that instead of waiting until everyone else is paid and then trying to squirrel something away for your goals, you set up automatic allocations to make sure your pay is flowing where you want it to first.
When you “set your targets” in step 6 above, for example, you want to take advantage of allocations to make sure you hit your goals for the short, medium and long term.
Fintech solutions like Sharsies, InvestNow or Hatch, which opens up the US sharemarket to investors here, are providing investment solutions like never before. But before you dive headlong into share investing, it’s important to be strategic. To invest well, you want to figure out what kind of investor you are, and Sorted’s investor kickstarter can help.
Everyone typically has an investment mix – a proportion of shares, property, bonds or cash that you hold within your overall portfolio. Which mix is right for you? This depends on why you’re investing, and what you’re aiming to achieve specifically (and not just generally getting richer).
This brings us back to your goals. Knowing the mix you’re after will drive your decisions. You can’t really dive in until you know what proportion of your portfolio should be shares, for instance.
By focusing on those areas of your financial life where you have most control and influence, you can take advantage of the opportunities that being an independent earner offers – like choosing contracts, earning more lucratively, having a better work-life balance.
Instead of just working for money, you’ll have money working for you. There are huge opportunities to drive your finances forward.