I was doing a 12-week roadmap exercise with a new member of Unreal Collective yesterday who is jumping into freelancing full time. One of his goals for our three months together is to reach a point where he is covering his expenses with his freelance.
I could totally relate to this — when I jumped back out on my own in April of 2017, my first goal was simply getting to sustainability. It’s a really insightful and empowering exercise to do a line-by-line budget of your expenses on a monthly basis and know what your monthly expense is.
I want to give you the transparent view here: I was getting started, I had cut my burn down to just under $2,100 per month.
Granted, I’m a single dude living in a studio apartment in Columbus, OH, with no personal debt or dependents. I started off in a very advantageous position, and I don’t share this to brag, but to demystify and talk about the taboo topic of money.
For the first 12 months, I was just glad to be able to pay my monthly bills. I didn’t want to cut into my savings at all or take on credit card debt.
I achieved that, only because I took small gigs here and there to make ends meet when cash flow was a problem. I did a horrible job planning for taxes, but luckily my withholdings for a few months working a job covered me.
Now in year two, cash flow is no longer a problem while living the same lifestyle. I’ve increased my burn a little bit, and have even hired an intern.
I need to update my spreadsheet, but I’d estimate my burn is closer to $2,600 per month as it sits, with the increase coming from employing an intern (mostly funded by a state grant) and expenses related to the podcast, which are shared.
I’m still being very cost-conscious, but I’m not sweating where the money will come from. I’m paying quarterly taxes and even starting to save a little bit again. Which has created a strange new question:
If I’m living the life I want to live, and making enough of an income to live that life, what should my financial goals become?
For a while I was thinking in terms of round numbers and milestones: ok, it’d be cool to bring in six figures.
But without the sort of fear or pain of just not making ends meet, the goal feels hollow.
I had a friend explain to me once that we rise to the level of our comfort. In other words, if I wanted to stick to the six figure goal, I would need to create a feeling of personal discomfort for anything less than that to create the necessary push to reach it.
At this point, I want to address two thoughts you may be having:
- WOW WHAT A FIRST WORLD PROBLEM OF PRIVILEGE
- Shouldn’t you plan to save for retirement, family, or unforeseen circumstances?
In both cases, you’re right. And I hope you’ll forgive the first world problem — I’m certainly not here to complain either but to give you some insight into how my thought process has changed.
In regards to planning for future costs, that’s probably true too. And the next best step would be to put together some sort of financial plan that creates new financial goals based upon the long term goals of this plan. Which leads me to my next story…
I was asking a friend and mentor how he closes this “comfort vs. goals” gap I just described to you, and how I could get myself to play at a higher level. (Quoted but paraphrased):
You’ll start to feel that discomfort when your vision outpaces your resources. When the vision you have for you and your business requires more time or capital to make happen, that’ll increase your financial need to reach the vision.
Duh. So simple, such a familiar concept, that I simply hadn’t applied to my own life.
As a business grows, it has more and more opportunity, and the vision for what is possible requires more resources to achieve. That may be expenses related to people and their time, technology, overhead like rent…
Businesses hire, outsource, or beef up technical capabilities to achieve the vision faster or at a higher level.
For the first year, my overall vision was pretty limited. In some ways, it was even selfish — my vision was earning a living as an independent while maintaining the lifestyle goals I had for myself.
That vision was achieved. Now I’m building a new vision that is larger and outpaces my current resources (frankly, mostly my own time constraints).
It’s a weird spot — never had this situation with Tixers (our vision exceeded our resources from day one) or as an employee. But, new questions and new problems are a good sign.