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Managing Cash Flow Highs And Lows As A Freelance Filmmaker

There is an ebb and flow to money that comes in as a freelancer or gig workers and it really can be challenging deciding when to purchase thing that are needed for business or for life and how to manage the money coming in. In this episode we discuss some techniques to manage the erratic income and outflow of money as a freelance filmmaker.

(This post might contain affiliate links to products. We may receive a commission for purchases made through these links.)

Relevant Links

Manfrotto Tripods

Profit First (book)

Mike Michalowicz

Helpful Summary of Profit First

** Motorbike Mike was not correct for the website link **

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Full Episode Transcript

NOTE: This podcast was transcribed by a tool I highly recommend called called Happy Scribe (affiliate link). We do our best to adjust the transcript so that it reads smoothly, but if we missed something please forgive any typos or errors.

Hey there, everyone, thank you for listening today and the topic today is going to be about managing cash flow while freelancing. And I feel like this is a topic that is important right now. And also it relates to last week’s topic about tripods and about something I said where I talked about the affordability of Manfrotto, which for me in my earlier days of filmmaking was challenging and that was because when I would freelance, I would go into phases of feast or famine, where it would be like you get a job and it would maybe be for many, many months or a whole year and you’re doing that and even maybe they’re paying for food and all that.

So that would be taken care of and I’d be able to save a lot and then there would be a drought.

And there were also natural cycles when you’re living in L.A. of that happening, too. So you can pay attention to that.

But this is more about when you get that money coming in.

Do you spend it? I always talk about how sometimes you would be freelancing and even if you had a buildup of money there, you would be like, “Can I get a couch that I need or will I regret that four months from now when maybe things slow down for me a bit if they slow down for me or not?”

You never know. This is a challenge with all freelancers, gig workers… And it’s very prevalent when I was living in Los Angeles. Even now, it’s like an ebb and flow that you can’t always predict.

And so what I am talking about today in relation to last week, is when I say, “Oh, I couldn’t afford that five hundred dollar Manfrotto,” what I’m saying is I wasn’t willing to afford, even though it’s a valuable thing, because back when I started this, I’d be like, “Oh my gosh, I just finished this gig. I have so much saved up. I’m going to go invest in a new computer, which I need.”

But then four months later, I’m like, “Maybe I should have held off because I didn’t need it as much as I thought I did.”

And that can be a truth for a lot of things that filmmakers need. That new piece of software that you need that would make your work faster… And you really have to weigh that.

So what I have become more adept to is using tools [to balance my spending].

And these are the methods.

It’s not really tools… tools implies app. And this is more of an internal way of looking at the ebb and flow of money coming in as a freelancer, as a filmmaker, as an editor, as anyone who is kind of running their own show.

Even if you’re an independent contractor or if you’ve got the LLC, we’re going to talk about all that.

So. I’m going to start to say that after I did that a few times, where I would just feel very secure in my spending and I went out and spent what I needed, I would then realize that that was not a wise thing to do because… Or not… Maybe I did it too much because then I’d have to really, really, reel it in for a month or two or three and not even spend on necessities and maybe I had to even alter the way I was eating and not eat as well, because I had already spent it on something that felt like a necessity, but maybe could have been held off a little bit or and not to say don’t get a Manfrotto.

But at the time I would look at that and go, “Well, maybe I can get the one from Walmart and that’ll do, you know, because that is a big price difference and it’s a big quality difference, but it’s a big price difference.”

But where I was in my career… That was an OK choice.

I was just starting and that was me taking a piece of equipment being like, “OK, I’m going to work with this and see what features I need in this piece of equipment or whatever.”

But I’m getting off on a tangent because I want to talk about the financial stuff.

So how do you manage getting in a bulk of money as a freelancer and then making sure it sticks around for a large amount of time so that you can maybe take some drought periods and make it to the next phase of a lot of work.

So when I was just starting to get behind the camera, I went to a workshop. They were very popular in Los Angeles… Where you get these business guys who kind of did Law of Attraction and it was an interesting fusing of the woo woo stuff with the business stuff, which was refreshing because you always thought that… At least I did, you know, the hard nosed business people, the Wall Street people, didn’t think woo woo and you know what I mean…

Like the new agey law of attraction stuff. And then you look at the law of attraction stereotypes and it’s not particularly practical. And it was the fusing of those two things which was very appealing to me because I like the practicality of smart business thinking. But I also like to think that we can bring things into our lives by intention and by focusing and that there’s things we don’t understand that are working in our favor when we do that.

So one of the ones that I went to… Oh, I’ll just name them, it was called… And I don’t advocate any of these…

I don’t recommend any of them. OK, but I’m going to break down [what happened]…

I really don’t [recommend this type of workshops] because this was how I spent money. And I was like, “Well, if I take this business class… I have some money. Now I’m going to take this business class.” It was like a five day class workshop where they actually just sold you more crap and or tried to. And it was not value laden, even though I spent a lot for it, because in my mind back then, in the way they implied it, is that the more money you spend, the more value you get, which is totally erroneous.

And I hate when people pitch that, “Oh, well, you get what you pay for.”

Not really. So just as a side note, I have a book. I’m not going to mention this guy’s name, but he’s a master marketer who was super popular maybe more 20 years ago. But he’s the guy who talks about joint ventures and everything. And he has one amazing book. And it was so amazing that I spent so much money on his coaching and all he did was throw these white papers at you. If you don’t know what a white paper is, it’s basically like just a paper…

Sometimes it was a conversation with somebody else who’s a good marketer, but it was just SO MUCH information overload and it muddied the whole thing. And he shouldn’t have even taken me as a coaching client, you know, to coach me as a client. But he doesn’t seem like an ethical person, quite frankly.

I wish I had just left it at the book. Sometimes you can get more out of a book. I’m just saying that.

So I was thinking, “This is going to bring me to the next level!”

And it didn’t.

And it was a total overspend.

That was a total tangent. But anyway, this is one of those companies and I don’t mean to be slagging on them because maybe it’s perfectly right for you, but I have to bring it up there.

Maybe I don’t.

So this company was one of those “rah rah, we’re in business, and also we’re talking about law of attraction” companies that created one thing – a great take away – that I began using as a freelancer. And it was very useful to me. I apologize for this past tangent that I just went on, but it is something worth talking about. In some cases you don’t get what you pay for. And I spent way too much on a marketing class that I could have gotten out of a book.

So anyway…

But this concept of [category] jars, he would call them, where you would break down money coming in into categories.

This is very similar to people using envelopes [to budget], but I liked the concept of jars. I don’t know why that appealed more, [maybe] because I actually do think the concept of envelopes is more about specificity in budgeting and it feels very confined.

The jars are an automatic allocation and there are some more fun allocations and we’re going to get into that right now, but it’s not like groceries [would get its own jar]. It was just like a general necessity [jar]. And when you get into the finite of groceries, sometimes, again, you still need a little wiggle room.

You [might] know what your cell phone bill is going to be, but you might not if maybe that month you went to Canada and your cell phone bill went up, maybe your grocery bill has to go down. So he does this concept about general categories you would do, and you break it down by percentage. So [let’s say] you are working a $1000 gig. OK, it’s a thousand dollars that came in. 10 percent would go to a savings account.

You call it a “financial freedom account”. I hope that’s not trademarked and I hope I don’t have to give credit to him. But I also kind of criticized him. So maybe that would not be something that… Anyway. 

But that part was brilliant. This jar thing. Nice.Helpful. Even though I kind of had a sense that that would be helpful. [inaudible 00:10:04]  So Jars. Oh, screw it. I’ll just say… It’s a company called Peak Potentials. Not right for everyone. Wasn’t really right for me, but they got me all hyped up because that’s what they do best.

And they build their stuff on psychology that makes people buy things that they shouldn’t. Sometimes it’s perfect for them. But I’m really anti-that. So because I think overall it can be very destructive in people’s lives. It was for me the ultimate reason [I left L.A.]. In addition to just having a very good experience [at a completed film gig], having worked for four months. And then I left L.A. traveling. But I was also in a bad financial situation because I went to so many of these thinking it would eventually create a breakthrough for me financially so that I wasn’t…

I mean, this thing is about long term, but I thought the LOA stuff, the law of attraction stuff would create other breakthroughs and all it did was make me get into serious credit card debt.

So I think that overall these kind of workshops are dangerous,

And so going back to the theories, though, this is the gem, so I don’t want to not give this guy credit for this.

So a financial freedom account… that was 10 percent. Long term spending account, which is more of you put 10 percent there and that would be like, “Oh, I’m going to need a car. So you put 10 percent of everything that comes in there. Then you’d have a fun account, and that was always really refreshing because then  when money comes in, you need a little bit [of indulgence] in order to kind of spur you on to the next gig.

So if I finished a long four month gig, maybe I would take a week and take a little trip vacation or I would get a massage and not feel guilty about it, because that’s another element. Sometimes we treat ourselves, but we still feel guilty. And this “Fun Jar” took care of it.

Oh, my gosh. I’m forgetting some of them [jars]. Then there was a oh… Oh my gosh, I’m so bad because I didn’t prepare. Anyway…

Well, there’s one more and I’ll write it in the blog notes. But the final one was just necessities and that ended up being about 50 percent when you’re starting off. And so you still get 50 percent going to necessity.

The reason why I didn’t do anything ahead of time researching this is because I don’t use this method anymore. It was a good starting off method and it’s maybe good for personal finance, but I’m pretty good at… I know what my expenses are in personal finance.

I don’t splurge. My greatest luxury is my dog.

So I don’t, you know, go out to fancy restaurants or anything. I guess my other greatest luxury, although I’m not partaking… Who knows if I’ll ever partake again because it got crazy expensive this year, too. But skiing where I’m really wondering whether I want to continue that, because the mountain I go to got taken over by Vail and they… That’s a whole other tangent anyway, that’s not even on a film topic, but that’s how I relax and now I, I don’t know if I’ll ever partake again, even though I love it, so…

I’m getting.. There’s an environmental aspect to that, too. Anyway, so…

That was the jars method.

And then the next method that came up most recently and that I have been doing for a year is more focused on just the business costs and finances and managing that. And I like that because you can continue to do the jars thing. And I still kind of do, but not really. And it’s more because there’s an allocation for the personal stuff, but it still keeps the money in the business.

And again, it doesn’t matter if you are a declared LLC or if you’re just a personal, you know, independent contractor or whatever or self-employed.

This is something that’s OK.

So there’s this book called PROFIT FIRST. And I heard about this from a blogger and she mentioned it in a related course, but it wasn’t about Profit First. And she was just saying, “This is how I manage my Profit First.”

You guys should read that book.

And it was a very casual thing.

But I swear she should have gotten deep into that. She should give a course on that.

And maybe I should give… Of course, I don’t know… But it’s like you don’t need it because the guy teaches it fantastically, you know.  Just so clearly on his own website.

So, Mike Michalowicz or Motorbike.com. If you can’t spell Michalowicz. I can’t at the moment. And again, I’ll put it on the Web page, but you can go to MotorbikeMike.com.

I know that because I’ve read his book and I listen to his audiobook as well, and he talks about a managing system that is absolutely so helpful to me because there is a personal aspect to the financial management of it. But it still keeps it somewhat separate. So I’m going to run down the categories.

Also 10 percent is a lot to put aside from different categories [with the Jars Method], especially in a business when you’re starting. So we’re going to talk about that, too.

I don’t want to get into the details of it, but I just want to say it’s a better way of looking at it.

So let’s say again… You finish a film gig. You’ve got a thousand dollars coming in and that should go into an account that’s called Business Income. OK, that’s just a catch all. And twice a month, every tenth of the month and every 25th of the month, you go through your accounts, you go into this account and distribute it to different other accounts in order to ensure that you have the right money that you need for things like taxes. Whether it’s taxes at the end of the year, which can kick freelancers’ asses if we’re not careful, because it’s a lot because we’re covering all of our crap like unemployment [insurance] and all that stuff which employers normally do.

So you’re kind of punished for being a freelancer.

But but then there’s another aspect of also making sure that is similar to the “Play Jar” that I mentioned earlier. You’re rewarding yourself, even if that reward is a five dollar sandwich.

So you put anything coming in into this business income account. And a lot of banks will now let you label this account.

And then let’s say it’s the 10th of the month.

You will now put in you… Can start with one percent actually into all the other accounts except for one other one, which gets the majority of it.

So you would put one into…

And so in total, there are five accounts.

One is called your Business Income account.

Then you have one called a Business Profit account.

One called a Business Tax account.

And one called OPEX, which is a spending account like an expense account. And so your business expense account.

So when you have this business income account, one percent when you’re starting off, might go to the profit account, one percent goes to the tax account, one percent goes to the business…

Oh, I’m sorry. Owners Pay account. I think I skipped that one earlier.

And then the rest goes into the OPEX account, which is again, the business expenses account.

So after you do this a few times… And I recommend the way I did it is I already had a little bit of spending cash because one percent out of what’s been made out of a thousand dollars is like 10 bucks. So you can’t live off 10 bucks with your personal expenses.

Make sure you have a month or so’s expenses that or however long you think it’s going to need to build up…

That’s the one thing where he doesn’t tell you how to transition because you shouldn’t be taking from these other accounts if you have your Owner Pay account and that should be that.

He’s very strict about these things because it’s a changing of a mentality rather than a…

Just a business accounting way.

But I found this very comforting for two reasons. One, the fact that they were talking about allocating for taxes in the midst of it. So you’re always putting away one percent, one percent, one percent, and eventually these percentages go up. But just that you’re even thinking about that when you don’t…

If you’re thinking about it in January and you have to file your March taxes, which businesses do sometimes, you know, you’re thinking about it two months earlier.

Or if you’re even if it’s April and you’re thinking about creating an account for taxes that you file at the end of the year. It’s a comforting thing to know because there’s always this stress around, “Did I do this right throughout the year?” You know, and I know a lot of people that have gotten surprises at the end of the year.

Plus, they always change the tax rules and everything, so you just never know. So this is a good way to at least incorporate it into your flow.

The other thing is that I always got very confused about traditional bookkeeping in a business. And this feels so much more simple to me because you’re like, “Oh, OK. So I have this much to spend in my expense account that I’ve created out of this thousand dollars. So if you take, you know, 10 percent, 10 percent, 10 percent…Or I’m sorry…

One percent. One percent. One percent. To the other accounts…

So you’ve taken out thirty dollars, you know that other seven… I’m sorry… $970 can go to business expenses.

And again, you start to shift as time goes on.

But he’s very strict about saying it’s not in your spending account, in your cash account, then don’t spend it. And he’s very… You don’t take from that profit account and go spend it if you need that extra leverage.

Now, this makes more sense when you’re putting more into the profit account, but it’s very possible even with the Jars, there was a little bit of shifting around in the structure, but I very much tried not to do that.

Sometimes it was necessary, but the process worked a lot better when I didn’t do that. And I just said no. And that’s really what this is about.

Saying no.

I have to say in Los Angeles, I was on the phone the other day with someone who is also in film, and we were talking about how fun but expensive Los Angeles is.

And there’s always a party to go to and there’s always hidden expenses built in with that, and you’re kind of expected to go out a lot of the nights of the week because it’s fun, but it’s also work.

But it’s fun work because you’re socializing with people you like, because they’re creatives also. And so it’s a nice, lovely way to be. So you kind of want to do it. But it’s a business expense, but it’s a lot of expense. So because it’s constant. So this [Profit First Method] puts boundaries around that.

[For example,] “I would love to go to that party, but it’s 50 bucks. I am going to skip that and maybe keep an eye on my expense account and make sure that that money is put toward more sensible things in regards to my business.”

So this gets more elaborate and these percentages go up in the accounts that are only getting like one percent at the time.

But that’s for you to go read his book because it is a little bit complicated when you start. I was kind of overwhelmed by it. You can go online and maybe I can find where there’s a fast print out of this whole thing online.

But the book is really necessary to read and I actually listened to the audio book a few times, too.

Eventually the [Business] Profit account is the Business Profit and it goes into another account and you get 50 percent of that because you need to be rewarded psychologically.

That’s important… To be rewarded for the work that you do.

Even if it’s just a sandwich, something just… It can be frivolous. But there is that frivolity and that kind of fun and the zippy-ness of it is something that we need psychologically.

He [the author] says that, and I can say when I do it, it’s really hard to do because you’re like “I work so hard for this money and there’s other accounts that could use more money.”

But it’s really…

I still for this quarter haven’t done it because I’m like, “I don’t know, it’s so weird right now.”

So, you know, there’s that coming from my earlier years of overspending.

But going back to the Manfrotto thing… That would be a perfect thing. YEAH!

Oh, so getting a higher level Manfrotto would be a perfect example of how you could spend that money.

Well, that’s still a business expense. This is meant to be a personal [expense like] take a vacation, get a massage, get a facial kind of thing.

Anyway because really that should go under OPEX [operating expense].

But I digress. The taxes also go into an account that just sits there so that you don’t touch it.

Read the book, though, because it does get a little bit more complicated. And I hope I didn’t confuse you, but this is translated by someone who has just started doing it for the past year and this is not my forte. It’s never been my forte. So I hope that by me having processed it in my “not-my-strong-point” mind has helped you.

And if you’re a filmmaker out there, it’s worth trying.

And so a lot of banks…

The first step… A lot of banks… If you already have a bank account at one place, ask them if it’s OK that you set up the number of accounts you need, like 5 accounts. And see if that works for you and if it does and they’re OK with it and they’re not going to charge you for it, because that’s just silly, you can get started right away.

And so that’s my little bit.

And I feel I was inspired to make this because the Manfrotto thing was really making me think like, “Why did I… Why am I restricting that so much?”

And it comes from overspending. At the start of my career when I had money and had finished jobs and was like, “Oh, my gosh, I didn’t spend money for like three months aside from rent and phone. Oh, I’m going to go buy something that I think I need or would make my life easier that I don’t necessarily need, like upgrade my computer or my phone.”

And, you know, that’s always…

Well, at the time, it was fun. Now it’s just something that I look at and I go, “Is this going to perhaps be a regrettable purchase a few months from now?”

And so this helps in that conversation a lot.

Profit first, Mike Michalowicz. OH, I have the book right here.

Why didn’t I spell this earlier? So



Or Motorbike Mike.

So that’s MikeMichalowicz.com or MotorMike.Com.

Fantastic. I love his stuff. I think he has even some free stuff on there like charts and things.

So that’s it. I hope this was helpful I. Would love feedback. Actually, if you try this, please let me know and see if it helps you.

And if you have your method of managing your freelancing finances and flow coming in, I would love to hear the method that you’re using or what you found, because I find this a very interesting topic. And today with a lot of people doing gig work and doing this whole thing where they really have to put into consideration retirem-

OH, I remember that fourth [jar]. OK, so see, this is OK. Yeah. So there’s a Gifts Jar right now and I remember the fifth jar.

I just remembered…

going back to the jars. I remembered it. It’s a giving jar.

It’s for donations and stuff. So that was the other one that I forgot. Anyway.

And that’s 10 percent, too, so sorry. Side note and I’m done now. I’ve talked for twenty six minutes. Holy cow.

I’m going to go. Have a great day and I will talk to you soon.


I am adding a note to this broadcast/podcast, whatever… That is important… An important distinction.

I am not against high cost education and not against these workshops that are really valuable to people that have a high price tag because the people who make them have to have a living as well, and if they have built that expertise, they need to, you know, charge the right amount and value their own work.

One thing that I don’t like, though, and the mistake that I have made when I’ve purchased the wrong course for me has been when they market their course – their very expensive course – as something that is going to make someone money in the end of it because….

You know, there’s always that disclaimer “We don’t claim any money will be made by blahblahblah… This is an outstanding example. These testimonials are just outstanding, you know, examples blahblahblah”

And it’s an important distinction to make because a lot of the courses that I have taken like that business course I talked about earlier was, “Oh, I can spend this now because they are making it sound like I’m going to be SO GOOD afterward that by, you know, making the leap, this will come back to me tenfold.”

Same thing with VFX school. 

OH MY GOD, the difference between what they promised and the job offers I got…

The non-negotiable… One of my one of the job offers I got was less than what I was making in Los Angeles.

This is after two years of very expensive education in VFX. It was thirty thousand dollars in Chicago. IN CHICAGO. I was already paying off my school loans, which if anybody knows Sallie Mae insanely high, and so then you’re trying to figure out how the hell am I going to pay for the Metro or the “EL” they call it there.

An apartment, a parkin-

And you just kind of go like, “Wow, I just spent two years believing in a lie that I would be making a lot more money that would cover my ass for these Sallie Mae things and the loan that I took out in order to do that schooling. And it was a total effing lie.”

And that’s what I’m saying is unethical.

When anybody ever says to me in a pitch that, “This is going to help you make money AFTER you take my course,” I’m just like, shut the hell up! I am walking out now.

And so, you know, I teach courses and I’ve seen other courses where they’re like, “Make money in the entertainment industry!!!”

And I will never, ever say that because I just feel like it is really unethical to even put that out there. I would probably make more money and I’m talking about everything [having to do with making videos and media] like [promos that say] “Become a YouTube star! Blah, blah, blah! Make the most money! Blah, blah, blah!”

I hate that because I’m like, “You cannot say that to people,” but it’s a great pitch and it works, but I think that if somebody is in a financial space where that stretch is uncomfortable, that is just such an unkind thing to do because you can’t say if they’re going to make that leap or not.

The other one I hate is, “OK, the money will show up” or, you know, “You got to kind of extend yourself and it’s telling the universe you’re committed.”

I hate that because it actually can…

That feeling of trepidation as you’re going out and spending is not conducive to having flow in your life.

And I feel like every step you take along that journey… This is an Abraham-

I’m getting very… Here’s my law of attraction stuff.

If you reach for something and it’s financially uncomfortable, a lot of the people that pitch stuff are like, “But that discomfort says you’re committed.”

And I say, “No, it’s the first step of a very uncomfortable journey that will continue and continue because usually the way the journey feels is the way the destination feels.”

And so I feel like just summarizing… When a big…

And then when they’re putting on top of that the use of neuro linguistic programming and just methods that they can use in a group setting that will get people all wound up to overspend.

And then they go, “Oh, you could put this on your credit card!”

Whoo! It’s so evil.

And I’m not talking about a payment plan, that’s something else, and that, you know, feels good sometimes just to be able to be like, “I’m just going to stretch this out.”

I’m talking about encouraging people to overstretch and then using psychological techniques to really push their buttons, to get them to overspend. And then that company that did that, does not have to deal with the consequences and the ultimate long term pain that that caused.

Maybe that week was fantastic.

And I had some very fun times at these workshops that I did. But that was a long term pain that I really do not…

So I was writing out the notes on the blog page that I created for the podcast. And I just wrote, you know, I really like Michalowicz’s book…

Peak Potentials about the Jars, but I do not recommend his [Peak Potentials] workshops AT ALL or any workshop like that, only because they are trained to push the right buttons to get you to overspend, and a lot of the times the best stuff is in the book and I found that across the board [to be] accurate.

Although sometimes you need that support, and I’m, again, going back to I don’t think that it’s, you know, expensive classes are a bad thing and maybe that some of his classes did help other people and a lot of these people sign up for these expensive courses to network [with other people]. So there’s other benefits to it.

I met fantastic people with it, but really it’s a sales pitch that can be very destructive and so that’s me and my perspective and my wisdom that I gained from that whole thing. And it was a hard lesson to learn, a really hard lesson.

So these jars would have protected me. You know, now that I do the jars.

 And so that’s why I’m like, “YAY to his book”.

Profit First definitely would have protected me.

So that’s why I’m putting this there, because sometimes you’re in that space and you’re getting all wound. You know, it’s an emotional choice. They know that, too. It’s an emotional choice. And it is, you know. If you’re not in the financial space, but you’re making an emotional choice to make that stretch, to make that purchase, but you’re doing it from an emotional point of view and they’re pushing those buttons that can be very harmful.

And that’s all I’m going to say.

It’s not inherently evil, but the way they go about getting people to make those choices can be. That’s it.

Anyway, I just wanted to add that side note.

And I’m not calling that organization evil or anything, I’m just calling the methodology evil. And I don’t know… That was 15 years ago. And I don’t even know if they’re still doing stuff like that or if their pitches changed and maybe they’ve become more ethical.

I know that some of these courses have gotten into trouble for a number of things. Some of the really… I’m not even going to get into that. That’s a whole other topic.

Anyway, thank you for listening. Have a great day. Take care.

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