Deliberate Freelancer #9: The Money Lessons I’ve Learned the Hard Way
What kind of money personality do you have? This is important to know as you handle your finances for your freelance business.
DELIBERATE FREELANCER SHOW NOTES
My budgeting goes all the way back to childhood and my $2 allowance.
Hear about my huge money confession and tax mistake. I immediately implemented two things to prevent that mistake in the future: I take 30% of my monthly income and place it into an online savings account that is earmarked only for taxes.
You have to spend money to make money. If you are the only one in your business, two things are going to happen: You are eventually going to reach your capacity. There are only so many hours in the day, and if you are doing everything, eventually you’re going to come to the end of what you can do. Short of raising all your rates all the time, your business is not going to earn more money.
Embrace the economic concept of opportunity cost: Opportunity cost is when you have a situation with more than one choice. You make a choice and go a particular route. The opportunity cost is the loss of what you did not gain by making the other choice.
Opportunity cost makes you consider the consequences of every choice. Should you work, work, work and do it all yourself—and lose time and energy and potentially higher paying clients? Or should you hire someone to help—and lose that money but gain more money, ideally, because you gain time to work for better, higher paying clients?
Know your hourly rate. Even if you don’t charge hourly, you need to know for yourself what your hourly rate is so that you know what things cost you. You want to pay people or a service less than your hourly rate so that you can gain back that time to either just enjoy it or to earn more than you’re paying those people per hour.
Set a monthly financial goal. Push yourself. Set a big audacious monthly financial goal. But remember, you have to spend money to make money.
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Resources:
Episode 3 of Deliberate Freelancer: Host a Solo Business Retreat