01. Spend less than you earn.

freelancers finance

Freelancers Finance rule number 1.

“Spend less than you earn.”

It might sound easy and obvious but most people don’t understand this rule.

The rule is as simple as it sounds but for most of the people it is harder to obtain. This rule is relevant to freelancers since you dont want to operate your service on a loss.

Business metaphor

See yourself as a profitable business. As soon as you spend more than you earn your business is not profitable, you are not break even. ->You want to avoid an unprofitable business at all costs.

You can run your business or freelance service on credit and debt. There are solid strategies and some might work out. credit and debt are some how ways capitalism work but it is much more riskier than following the advice i am giving you in this post. Sending less than you make and having some backup is much more sustainable and you’ll be able to earn money with you passion for a lifetime. Do you really want to risk it?

Effects of spending less than you earn

  1. Pay back your debts as quick as possible. If you don’t have any: your personal finance is profitable and sustainable.
  2. You are able to save for a financial backup. This will bring you through hard times.
  3. You are able to invest into new gear or start a personal campaign for new clients.
  4. You are able to reinvest what you save and get a passive income stream.
  5. Your strategy is sustainable and set for long term plans.
  6. Freelance is less riskier.

How to?

You have to summarize all of your earnings and then summarize all of your spending. Earnings are easy for most of you. But if you have diversified income streams just add them together. Whats tricky are the expenditures. They are hidden in fees, taxes and debt. Go after the spendings like a detective and add them on a excel sheet or on paper, whatever you prefer.

Small but repeating costs are the most overlooked positions. They look harmless but add up together over time. Software subscriptions, gear leasing, Coffee to go every morning.

To get a proper comparison calculate the earnings and spendings for the same time frame. I recommend you to gather one month. Month after month. To get an overview summarize the total numbers per year. The anual numbers give you a better feel of what you spend a big chunk on because some monthly costs look small but gatheret they show how much it really is.

Now that you keep track and income and spendings are under control apply the rule:

Spend less than you earn. Always.

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This is no financial advice. Everything written is my opinion only and you should do your own research. Investing in Bitcoin and other cryptos, lending, DeFi, liquidity mining are high risk investments. You could lose everything, only invest what you can afford.
Bear in mind that some of the links in this post are affiliate links and if you go through them to make a purchase I will earn a commission. Keep in mind that I link these companies and their products because of their quality and not because of the commission I receive from your purchases. The decision is yours, and whether or not you decide to buy something is completely up to you.

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