Skimping on Expenses in Business Might Not Always Be Profitable. Here's the Explanation!
Investing Wisely for Freelancers: A Guide to Maximising Time and Resources
In the dynamic world of freelancing, every minute and dollar counts. A smart investment today can empower you to do more tomorrow, saving valuable time and resources. Here's a comprehensive guide to making informed decisions about investments for your freelance business.
This article focuses on money tips for freelancers, offering insights into the process of choosing the right investment. The key lies in considering the benefits, features, and the balance between cost and benefits.
Investment Benefits and Features
When evaluating potential investments, key benefits to consider include the potential for passive income, upfront and ongoing costs, time and effort required, risk level, and alignment with your financial goals and capacity.
Passive income opportunities, such as rental properties or dividend stocks, can provide recurring income without the need for continuous active work, which is particularly beneficial for freelancers managing time constraints.
The cost of an investment also plays a significant role. Real estate investments often require substantial capital and ongoing costs (taxes, maintenance, management fees), whereas investing in dividend ETFs might require less initial capital and lower maintenance.
The effort and time commitment are also crucial factors. Some investments, like Amazon FBA, require active involvement in sourcing, marketing, and inventory management, while others, such as dividend stocks, are more hands-off.
Evaluating volatility and market risks is essential. Dividend stocks tend to be less volatile, while property values and rental income can fluctuate. Safe business ventures emphasise risk mitigation through stable income and low financial exposure.
Freelancers also benefit from investments that allow for rate setting and manageable scale. Diversifying income streams by mixing active freelance projects with passive investments can improve financial security.
Weighing Cost Against Benefits
Effective weighing of cost versus benefits involves assessing expected returns—both monetary and non-monetary—against initial capital outlay, ongoing expenses, and management effort.
To weigh cost against benefits effectively:
- Calculate Return on Investment (ROI): Estimate monetary returns like dividends, rental income, or profits versus total costs including hidden expenses.
- Factor Time vs. Freedom: Consider how much time the investment requires, balancing your availability as a freelancer.
- Consider Tax Implications: Freelancers can capitalise on deductions, improving net benefits of investments.
- Assess Risk Tolerance: Prioritise investments aligned with your comfort with volatility and initial investment risk.
- Project Long-Term Growth vs Short-Term Rewards: Some investments grow slowly but steadily, while others may bring faster returns but require higher management needs.
Choosing the Right Tool or Service
When selecting a tool or service, it's important to consider the benefits before making a decision. For instance, if social media posts don't need to be looped, a different social media scheduler might be a better choice than MeetEdgar.
However, it's essential not to choose a platform solely based on cost. Doing so might result in a tool that doesn't meet your needs. For example, ConvertKit might not be the right choice for freelancers who don't need email sequences or multiple content upgrades.
Investing in MeetEdgar
MeetEdgar, a social media scheduler, might be worth the investment for automating social media posts. However, the price increase to $79/month should be carefully considered before making an investment.
Further Resources
For freelancers seeking actionable programs to help create a successful business, the SaganMorrow.com School offers valuable resources.
Remember, your time is valuable, and investing wisely today can empower you to do more tomorrow. By considering the benefits, features, and the balance between cost and benefits, you can make informed decisions about investments that complement your business, promote income stability, and align costs with expected benefits realistically and sustainably.
[1] Investopedia. (2021). Dividend Aristocrats. [online] Available at: https://www.investopedia.com/terms/d/dividendaristocrat.asp
[2] TurboTax. (2021). Freelancer Tax Deductions. [online] Available at: https://turbotax.intuit.com/tax-tips/self-employed/freelancer-tax-deductions/L6UoRKZ50
[3] NerdWallet. (2021). Dividend Stocks: What Are They and How Do They Work? [online] Available at: https://www.nerdwallet.com/blog/investing/dividend-stocks/
[4] Investopedia. (2021). Risk Tolerance. [online] Available at: https://www.investopedia.com/terms/r/risktolerance.asp
In the context of managing a freelance business, it's crucial to consider investment opportunities that provide passive income, such as rental properties or dividend stocks, to empower oneself with recurring income without constant active work. To make informed decisions about investment, one should weigh the benefits, features, and the balance between cost and benefits, taking into account potential for passive income, initial and ongoing costs, time commitment, risk level, alignment with financial goals, and tax implications.
