Trends

Ask Yourself 3 Questions Before Spending Your Freelance Income

By Stacey Closser May 1st, 2018

Working as a freelancer requires a split professional life. You’re both the employee looking for a bigger paycheck and the boss demanding effort on nights and weekends. Satisfying both sides is tough.

For instance, how do you differentiate personal expenses from business expenses? What’s a reinvestment and what’s an indulgence? Justifying the spending to your boss-self is no small task. Here are a few ways you can make it easier.

The magic formula for a freelance budget

Bosses ultimately only care about ROI. In their mind, money isn’t just spent toward a product or service; it’s also an investment that should provide a measurable return. So when considering any significant expense, ask yourself:

  • Does this directly improve my ability to make money?
  • Does this improve my skill set so I can achieve my professional goals?
  • Does this improve my professional satisfaction without undermining my long-term career goals?

Before you make that purchase, you should be able to answer yes to at least one of the ones above it. If you hit two or even three, then the expense is not only allowable, but a good bet on your business.

Spend money, add value

A shrinking workload is a clear indicator it’s time for my favorite kind of reinvestment: professional development. It may be as simple as buying a new piece of technology, or as intensive as venturing into a new writing genre. Regardless, it’s still important to do a cost-benefit analysis.

Will going for a graduate degree materially change your career, or is it overkill? Do you know of free or low-cost options to test the waters before you commit? Point is, do your research and weigh the benefits to your career (short- and long-term) before you lay down the credit card.

Common professional development expenses might include:

Retail therapy

For creatives, job satisfaction is fundamental to our well-being. When your best days, full of stellar reviews and a litany of happy customers, still feel like your worst days, it’s time to explore personal investment opportunities, even if the product or service doesn’t directly impact your bottom line. Make sure you have your rainy day savings set aside, and then spend some time and/or money on what makes you just plain happy. For instance, I’d argue my Bose Soundlink is the most important product in my office. Does it bring in income? No, but it helps me work.

Other possible job-satisfaction expenses:

  • Delegation (interview transcription or research assistants)
  • Vacation (a real vacation to unplug, not a veiled research trip for a project)
  • Self-care (meditation, massages, retreats, gym memberships)

Remember, the bottom line isn’t always going to have a clear, direct impact on the bottom line. Investing in yourself can pay a different type of dividend. Be responsible, make friends with an accountant who can help you write off credible business expenses, and enjoy the life you’ve worked hard to build.

For more tips and insights on investing in your freelance career, subscribe to our weekly newsletter.

Tags: