I want to talk about something crucial that the education system doesn’t bother teaching us.

Something you have to learn if you want to succeed in freelancing (and life):

Higher Income ≠ More Wealth.

Fact: You can be earning a six-figure income and still be broke.

I’ve personally seen these three real-life scenarios:

Someone who retired with well over $2mil, spent it all within 7 years and now literally has to borrow money for food every month.

Someone who earns a big salary ($20k+ per month) and is so deep in monthly debt he can’t pay his essential expenses.

Someone who is more wealthy than Gary Vaynerchuk and lives a very humble and 'normal' life.

The takeaway?

Financial security isn't about how much you make, but how well you manage what you get.

I hear a lot of freelancers complain about their financial challenges - especially when it comes to the ‘feast & famine’ cycle.

But if you look at how they spend their money, you’ll quickly see why they’re prone to struggling. They haven’t put smart spending habits in place.

I’m no financial expert, but I’ll give you the best financial advice out there (for free):

MANAGE YOUR FINANCES, OR THEY WILL MANAGE YOU.

This is even more crucial for freelancers because your income is going to be more unpredictable.

If you don’t have a good handle on your finances, they will own you.

But, learn to manage your finances, and you’ll be prepared for the income valleys and even be able to enjoy those seasons.

It’s never too early or too late to start putting good financial habits in place.

So let’s take a look at 7 key smart spending habits to fix your finances.

7 Smart Spending Habits for Freelancers

1. Fix your ‘Essentials’

I often hear of people who struggle to afford the basics each month.

But look closer and they have the latest iPhone, or they eat at restaurants three times a week.

If you’re struggling to pay for the actual essentials (you know, stuff you actually need to survive), then it means you need to fix your perspective on the ‘essentials’ and align your spending with that.

Cable can be replaced with Netflix or YouTube.

Eating out regularly can be replaced with cooking easy meals.

All the name brands and latest gadgets can be replaced with more affordable (still effective) versions.

I’m not saying you should never have these things. It’s usually just a case of ‘later’ vs. ‘now.’

2. Pay the Bills

This should be obvious. But make sure you know your exact ‘break-even’ point: the amount you need to cover all your necessary living expenses like rent/mortgage, food, medical, transport, etc, as well as necessary business expenses like internet, phone, hosting, email marketing, etc.

If you don’t have a clear number in mind, it’s way too easy to underbudget and ovespend.

🧓Tip from a wise man:

Take all your expected annual expenses (domain renewals, accounting fees, vehicle fees, birthday gifts, home repairs, etc). and divide by 12 so you factor in a monthly expense on your budget. That way you’ll be well prepared for the annual fees.

I’ve found that most people don't budget properly for annual expenses, which often leads to costly surprises.

3. Save for Repairs & Upgrades

Make sure you save for laptop/PC repairs and upgrades, as well as software upgrades, new tools, apps, etc.

Having rundown or outdated equipment won’t just cause frustration, but will make you inefficient and could even cost you clients or projects.

Plus, these expenses are often tax-deductible, so it’s worth making these part of your expected annual expenses.

4. Have an Education Fund

Why’s this here?

Because learning should always stay a part of your journey.

If you’re a grandmaster at programming, focus on upskilling in marketing or sales.

Things are always changing in business and the freelancing world (just look at AI). Those who stop learning will stagnate and quickly lose any competitive edge.

You need to keep investing in yourself. And you won’t do it if you don’t put your money where your mouth is. Figure out what you want to master next and save for that, whether it’s online or offline learning.

5. Work in Some Networking

Attending conferences and social events should also be part of your budget.

Making connections with businesses, potential clients, partners and referral sources is important if you want to keep growing your business. Yet it’s one of the first things to get neglected when things are going well.

If you are an introvert like me, this part may be quite challenging. But it’s like building a muscle. Just do it, and you’ll see the results over time.

It’s also important to keep interacting with others so you don’t get isolated as a freelancer.

Remember the main goal of networking should be to build connections for new potential business.

So yes, go to developer networking events. But also include networking events for business owners and small businesses - that’s where you’ll find clients.

Of course you shouldn’t be a clown and try sell your services in every conversation. Just be approachable, be interested in people and learn about what they do. Eventually you may click with someone and then you never know what it could lead to.

6. Save for Rainy Days

Don’t wait to learn the hard way that you need to have an emergency fund.

What would happen if you had to go into hospital for 3 months?

What would happen if you lost your 2 big monthly clients?

You need to plan for these as if they’re likely scenarios.

Make saving the first thing you do with your income, not an afterthought.

Plan to save a certain percentage of your monthly income until you’ve built up an emergency fund (literally cash in the bank) that will cover your monthly expenses for at least 3-6 months.

Don’t fall into the trap of ‘I’m earning a lot so I can spend more now.’ Treat your emergency fund as the primary ‘luxury’ you need to invest in before you start doing any lifestyle upgrades.

7. Treat Yourself

With all of that said, you’ll never be able to enjoy being in a good financial position if you’re feeling burnt out all the time.

Build some balance into your work life by building some time off into your budget.

Plan for frequent mini-breaks throughout the year, and plan a longer break to travel and take your family with at least once a year.

I used to struggle with this because I’m very goal and project-oriented. But I’ve realized how important it is.

Not just for the sake of staying in a good headspace and being able to maintain the energy I need for work.

But because life should be full of memories to cherish, not full of memories behind a laptop screen.

Otherwise, what's the point of working so hard? 🙂

Don’t neglect what’s truly important in life. All that is tangible will perish.

Live your life - and plan your finances - with that in mind.

That’s my 2 cents for this week 😉

Cheers!