A Conversation with Sean Pyles from “Smart Money” Podcast
By: Devon DiComo
February Special Series on Self-Employed Finances Q&A
Sean Pyles is a producer and host of the NerdWallet podcast Smart Money. He delivers thoughtful, friendly, actionable advice by debunking common money myths and offering up new ways to prioritize your penny.
In Smart Money’s new series, Personal Finance for Self-Employed Workers, the Nerds focus on advice for self-employed workers — from tips on how to manage your taxes, how to budget, and more. We interviewed Smart Money’s Sean Pyles to learn more about the series!
Sean on the series “Personal Finance for Self-Employed Workers”
Devon DiComo: Where did the idea for this series come from? And why is it important for listeners now?
Sean Pyles: This series came from the lived experience of my co-host, Elizabeth Ayoola, who has run her own business (in addition to her 9-5 at NerdWallet) for a number of years. Elizabeth knows how complicated finances can be when you’re self-employed. Together we want to help listeners understand how to navigate vital questions that self-employed workers have about how to manage everything from budgets to paying taxes.
Taking the step to be self-employed is an ambitious goal that many strive for. But doing it right goes beyond having a solid business plan — self-employed workers need to have a plan for their finances, too. Front-loading this work by sorting out what type of incorporation might be right for them, how to separate business finances from personal finances and even setting up retirement accounts from the outset will make it so these workers can focus on running their businesses while their finances can take care of themselves (at least somewhat).
DD: What is the number one question you get asked by freelancers when it comes to managing finances?
SP: One of the most common questions we get from self-employed workers is about how to budget when their income can fluctuate from one month or one season to the next. Accounting — literally — for seasonality in income can help these workers weather the natural boom and bust cycles that can come with being self-employed. In this case, it’s important for self-employed workers to know their “bare bones” budget. That’s the absolute minimum they have to spend monthly on things like rent, groceries, medication — all the stuff in your “needs” category. That can give them an idea of the minimum amount they need to earn monthly to cover their must-have expenses. And If they know that they just won’t earn that much some months, they should try to set aside money from their higher-earning months to cover those lean months.
DD: Managing finances can be stressful and overwhelming! What is a good starting point for freelancers to better manage their finances/plan?
SP: Take it one step at a time! Self-employed workers have a lot to manage. They don’t have to sort out their budget, retirement savings and business plan all at once. I’d recommend they focus first on the high priority things. Like if a gig worker or contractor feels like their finances are out of control, they should start by making a simple budget. We like the 50/30/20 budget at NerdWallet, where half of your income goes to needs, 30% goes to wants and 20% goes to debt payments and savings. Depending on income and expenses, some people might need to retool some of those percentages, especially if they live in an area with expensive housing costs. But getting a baseline of what they’re working with financially can help people map out the next steps of their financial plan. That might mean trying to find a less expensive way to resolve some debt that they owe, or setting up automatic deposits into a savings account to build an emergency fund. If people find that they keep worrying about a particular area of their financial life, that can be a good clue about what to focus on sooner than later. They might be surprised by how many options they have to resolve this issue and how much better they’ll feel afterward.
DD: Are there any myths about self-financing that make it more difficult or confusing for self-employed workers?
SP: Some self-employed workers think that commingling business money and personal money is totally fine. And for those who are really organized, that might be the case. But for people who are prone to forgetting which expense was for work and which was for their personal life, keeping a firm line between personal and business finances is probably the best idea. That likely means setting up a business bank account, getting specific credit cards that are just for business expenses, etc. Setting up finances this way will make managing things like taxes much easier — especially if they ever get audited.
DD: What is one key piece of advice you would give self-employed workers and freelancers when it comes to finances?
SP: Talk to others who know more than you. That means others who have run businesses similar to yours, Certified Financial Planners who can help you understand tactics to meet your financial goals and Certified Public Accountants who can help you wrangle your taxes. The goal is that you can get guidance from people who have been through similar experiences as you, can help you avoid their mistakes and show you opportunities that you didn’t know you had. Build a network to help you navigate the day-to-day struggles of being a self-employed worker.
DD: What other podcasts pair well with this show, and especially this series?
SP: “How I Built This” with Guy Raz from Wondery would be a great complementary podcast for this series. That show explores what’s possible in the world of business and the hard work, mistakes and luck it takes to accomplish what you want. So that’s the aspirational side of things that anyone hoping to succeed with their small business needs. Then listen to this series on Smart Money to get the practical tips to bring these aspirations to life. One of my goals with Smart Money is to help people reframe money as just a tool — a tool people can use to get what they want out of life. But you do need to dream a bit and imagine what’s possible so you can build a roadmap to accomplish your goals.
DD: Can you share what the upcoming episodes will be about?
SP: Happy to! In each episode of this series, we tackle a different facet about self-employed finances. The first episode is about covering the basics of managing your finances as a self-employed worker — budgeting, knowing your financial goals and understanding the “why” underlying all of this work. In the second episode, we build on these themes and go deep into the world of taxes, including whether you can actually write off a Mercedes G-Wagon as a “business expense.” In the third episode, we talk about how self-employed workers can set themselves up for retirement, including what kinds of accounts they have access to and how to build retirement planning into long-term business planning. Then we wrap up the series by exploring different types of business incorporation that people can take advantage of, like an S-Corp, LLC and a sole proprietorship. Our goal is that by the end of this series, our listeners will be prepared to either fine-tune their finances as self-employed workers or take the jump into the world of self-employment.
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