Freelancing: Before you make the jump💰
You dream of eating the rich, being independent from the giant game conglomerates and making games that hold true to your values. That’s all great but how the hell do you do that AND financially survive!?
BUT HOW!?
This post is the ultra basic. Stuff you ideally do before going into freelancing but hey, it’s never too late to better ourselves. We’re covering the foundations of financial literacy and how it applies to freelancing
Topics covered:
Why you should be financial literate
Knowing your expenses and budgeting
Basic tools and resources
Get a Job
Answering your questions!
Disclaimer: I am writing this from a North American perspective. I am able bodied and have many governmental advantages too, ie: Healthcare. I am writing this because I have seen these issues from peers with similar backgrounds as myself
Why you need financial literacy 📕
To me, financial literacy is as important as basic hygiene, learning to cook and cleaning. It’s a basic life skill. I don’t want to be financial dependent on anyone but me. Financial literacy can prevent toxic relationships, grant you freedom and enable you to have a better life. To be honest, it feels ridiculous that I even have to explain why financial literacy is important but sadly, our education system sure doesn’t prepare us! According to an Ipsos survey in Canada, ‘’Less than one in five (15%) believes they have strong financial literacy skills, while nearly two in five (39%) rate their knowledge as poor’’
Nala is very disappointed by the figures. You don’t wanna disappoint Nala do you?
Now in regards to freelancing, especially in the tumultuous games industry, financial literacy has the crucial role of increasing your chances to survive. Understanding what your money is worth, being aware of your cost of living and learning to optimize your income are just few of the many steps needed to make a living in the industry. A freelancers gig is obviously much less secure than a salaried person. Yes there is more flexibility, but that comes at the cost of stability. Taxes are not automatically witheld, there’s no health insurance and certainly no paid holidays off. What I'm trying to say here is that a freelancer’s overall financial health is more precarious than that of a salaried person.
Now within the context of freelancing in video games, here is what I consider as basic knowledge
Know your expenses/budget📈
Easiest way to figure this out is to go through all your bank statements. It’s an uncomfortable process, you might feel embarassed about ‘wasted’ money but this is part of the process. Do a tally of a couple months worth of expenses and calculate the average.
Afterwards, I HIGHLY recommend taking a look at this Freelancer Rate Calculator sheet that was made by Alexandria Neonakis (@beavs.bsky.social). Make a copy of it and edit it to your specific needs.
Filling out this sheet thoroughly will force you to research your financial self. You need to know your expenses and what your budget looks like.
Basic Tools and Resources🔨
Find YOUR Financial Institution 🏛
Every bank, whether brick and mortar or digital, have their pros and cons. Here’s a couple basic notions you need to look out for
Interest on chequing account
Interest on high interest saving accounts
Investment Savings
PSA: Mutual funds suck, there’s a ton of other better alternatives, please look up your local ones!
Any transaction/yearly fees
Any other perks: Insurance? Cellphone deals? Travel?
The interest rate on a basic chequing account can vary as much as 0.05% to 2.25% depending on the institution, that’s a huge gap!
$1000 at 0.05% yearly would give you $1000.50 at the end of the year. The interest rewarded you with…50 cents
$1000 at 2.25% would give you $22.5
That’s a huge difference.
Take the time to look up better interest rates that match your financial reality. It will pay you back silently behind the scenes!
I’m intentionally not naming specific banks/promotional offers because this is a very personal matter and well, I’m not getting paid to endorse anything (or getting paid at all for this!)
Find YOUR Credit Card 💵
You are going to be using your credit card a lot. In my case, my freelancing career has lead me to travel a LOT. I knew I had to optimize that and thankfully, a lot of credit card companies have really cool deals! Most of them are airplane related, basically, you gain x_amount more if you book your tickets via their credit card. Certain credit cards give you a very good cashback % on hardware stores. This could be really useful if you’re doing renovations to build a studio (Looking at you audio people!). These are just examples that I have from the top of my head, worth looking into what works for you!
Similar to a financial institution, there’s a lot to shop around for, take your time, write down the pros/cons and make an optimized choice!
Protect your gear⚙
I am BEGGING you to have renters insurance. It’s usually quite cheap, most of them are about 15$ a month and if some unit in your building catches fire and damages your place, you are covered.
Our gear is easily worth a couple thousand dollars, please take the time to insure it. Remember to take update pictures of what you own for insurance claim purposes (you need proof!).
Taxes💸
Yeay taxes! Except when it’s YOU that has to be pay them, ouchies (but hey, I enjoy public roads and schools).
Right of the bat, you’ll be paying way more taxes up front than salaried employees. That’s because in most situations, a salaried employees cheques already have the provincial and federal taxes cut weekly by default. That is not the case for the freelancers.
Here are a couple of important links you should read up on if you’re based in Canada, I am not specifying exact numbers because it changes greatly depending on your location. PSA: don’t forget that you owe taxes both federally AND provincially!
Tax rates and income brackets for individuals
Guide to Taxes in Canada, how to file them and info on deductions
Very important info here: If you make over $30k you MUST collect GST/HST and you will have to pay taxes either quarterly or yearly. Make sure you look into this!
There are a ton of online tools that give you a rough estimate of how much you will be paying in taxes: WealthSimple Guide
These types of tools aren’t fully accurate but do give a decent rough image of what your situation may look like. My general rough guide is to save a good 35-45% of your income towards taxes. That number is quite steep but I personally prefer to be over prepared.
Get a Job😱
‘’But I want to be a freelancer!’’
You serious? (yes)
My #1 advice with people wanting to start out as a freelancer, ESPECIALLY in game audio is to have another stable source of income. Freelancing will not pay your bills unless you are incredibly lucky. When I started out freelancing in game audio it definitely did not pay my bills. Teaching piano sure did though. There is no embarrassement or shame in having an actual stable job on top of your freelancing career. It doesn’t even have to be related to your field! Let it be something that still leaves you mental space to freelance but also gives you a stable paycheque. There are so many reasons to have a part time stable job:
Steady paycheque
Lessons your tax burden
Easier to contribute to pension plans
Stability
This might even get you health insurance!
*In the Canadian labor laws, part time employment is usually enough to qualify for health insurance.
I feel like there’s always been this shame of ‘not hardcore enough to go full time freelancing’’ and i kinda hate that. There’s been record breaking layoffs in the games industry and in my experience, it has never looked worse. It’s scary, disheartening and cruel. You don’t owe this industry anything, especially not your financial stability. So be proud of having a stable income
Use What You Have🎈
This is a mantra I live by and that I wish seniors of the industry would talk about more. Here’s a little anecdote:
In University, I won a composition competition in which I won $2000. That was an insane amount of money for me and I felt so relieved. I was thinking how much it’s going to help me pay rent and the mental stress it reduced. During office hours, my teacher said that with the money I won, I should buy these hella fancy microphones. I believe they were 700$ each? I remember thinking ‘’What will I do with that…I don’t even have a studio with decent acoustics amd 0 paying projects!’’. Clearly that advice was out of touch for my financial reality. I decided I was going to save that money and I sure am grateful I did. Pandemic hit less than a year later and money was hella tight.
My point is: Only buy software/gear if it will pay itself. You probably don’t need the fanciest CPU, cute keyboard or expensive webcam. This might be controversial, but not having the speediest workflow is sometimes ok. If you don’t have that many contracts and if your freelancing career isn’t taking care of your bills, you don’t need to invest all of your money into it. It doesn’t matter if there’s an amazing Black Friday deal or if all your peers are gushing about their new purchases. Buy less, think thrice and use what you have.
Answering Your Questions!✨
I posted on Bluesky a little while back asking if you had any questions so I compiled them here:
Q: ’’How to get gigs or funding’’
A: Funding: Research your options on a federal, provincial/states AND municipal grants. Call the offices up and see if they have advice on applications and/or if they even have grant writing workshops. If your grant was declined, see if you can receive feedback. It’s absolutely normal to fail you grant applications, I have been declined way more times than I have been accepted. Gigs: I promise I’m writing an entire post dedicated to this, please be patient with me!
Q: What are the big things to be aware of from a tax perspective in Canada?
A: You need to collect GST/HST after $30k. If you are under a certain income, there’s free clinics that help you file your taxes: https://www.canada.ca/en/revenue-agency/services/tax/individuals/community-volunteer-income-tax-program/need-a-hand-complete-your-tax-return.html
Q: What forms of payment are most suitable (eg flat fee, hourly, rev share, etc)?
A: Hourly: Only for fairly short projects with quick turnaround otherwise stick with a flat fee and of course, insert your limitations/constraints. You don’t want to be doing extra work because your flat fee didn’t cover it. Rev share is a great option when the team doesn’t have the budget they need to hire you!
Q: Is "crunch" inevitable in game dev, or are there any effective ways to avoid it?
A: I’m all about efficiency, Agile/Optimizing Workflow. I have seen so many new studios AVOID crunch that it makes me believe that it is not necessary. At the worst, it was the studio founders putting in the extra hours, not the employees. So no, I do not believe that crunch is inevitable.
And look, there’s going to be trial and error! But I hate the myth that you ‘need’ to do crunch. With experience, maturity and respect of agile, crunch can be avoided.
Ok that’s it for now! I’ve been feeling inspired to write about freelancing and the none technical aspect of game dev because I’m regularly pissed off. That’s right, I ain’t writing this out of love and giggles. I’m mad that my friends get screwed over, I’m annoyed that folks are getting laid off en masse in what seems like a never ending industry crisis. I hate it when contractors get cast aside from game credits and celebrations. The game audio community inspired me to share my knowledge so here I am!
Stay tuned, next post is probably the most asked question: How to get gigs?
