Saturday, 7 September 2013

Tips for being self employed and staying self employed

I have essentially been self employed or a contractor since I was 17 and still in high school. Here is what I have learned:

1. Always have more than one source of income. The more sources you have the better chance you have of staying a float.

2. Diversify these incomes. This is key. Make sure that the incomes can be related but not dependent on each other. This way if one side of the market fails then you can still pay the bills.

3. If at all possible save half of your money. I am personally used to living off of very little so I can save a lot of my income. If you can save half of your after tax income then you are in good shape. This way if something major happens you can weather the storm financially.

4. Learn about investing and invest your money in a diversified portfolio. This one is really important, in fact I could make another list of rules just on this one alone. Investing is the one true way of keeping your money and making a lot of it. If at all possible you should put half of your income into a diversified portfolio.
- Also if you didn't know this you can make money off of falling markets and commodities by either shorting the stock or investing in a bear ETF.

5. Make connections for the future just in case. I go to meet ups occasionally and I make sure I meet all of the recruiters and add them to linked in. Having this large base of recruiters can help me out in some way shape or form if I need it in the future. Recruiters need to fill spots and sometimes those spots can be very advantageous to you in the future.

6. If possible have an exit plan. Having an exit plan like selling your business can be beneficial. Often times the country you live in has a tax advantage for selling your business. This could be difficult in some cases. For example it could be hard to sell your Udemy courses to another person.

7. Try to legally pay the least amount of taxes (please note the word legally). There are always small thing you can do that will have an impact on how much you take home. These things might be putting as many expenses on your credit card or paying yourself in dividends. Whatever the reason make sure you hire a great accountant to help you save money.

8. Plan for retirement early. If you save half your income and put in a diversified portfolio then you should have no problem with your retirement. But make sure you start saving your money sooner rather than later.

9. Try very hard to not upgrade your gear and keep expenses low. I grudgingly upgrade my gear. I think I might have to upgrade my MacBook Pro and it's going to be hard for me to purchase it. Remember, it's about 5 times as easy to spend money versus make it. I personally try to make do with what I have versus buy a new solution. Take into account what you use the most and what you use the least. In the future try to buy less of the things you don't use.

10. Learn to live with less. Personally, I love the minimalist lifestyle. In fact I love having less stuff. I try to give away or sell all of the stuff I don't use. I love this process. For me less is so much more.

11. Try to stay out of debt. I personally have no debt which is awesome. But I had to make some very large sacrifices to do it. Sacrifices such as: living in a less desirable place, not going on expensive vacations, sacrificing my personal life (because life is expensive) and more. Remember when you are in debt everything you do costs more, so if at all possible try to stay out of debt This is mostly consumer debt, mortgages do not count.

I hope this helps. If anybody has any other comments about what to do please let me know.

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