The Freelancer Financial Freakout: How to avoid it and start building wealth | Yvonne Lines | Skillshare

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The Freelancer Financial Freakout: How to avoid it and start building wealth

teacher avatar Yvonne Lines, Mindset Mentor for Lovin' Life!

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

8 Lessons (1h 4m)
    • 1. Welcome and introduction

    • 2. Crushing mindset blockers

    • 3. Increasing your net worth

    • 4. Eliminating high interest debt

    • 5. Know your numbers

    • 6. Setting up passive income

    • 7. Getting started with investing

    • 8. Congratulations and recap

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About This Class

6 simply explained actions to help you stop stressing over finances.


When you don't have a regular pay check, it can be tricky to know what to expect financially. How do you plan a vacation? Can you afford to rent a studio? Will your bills get paid? When can you stop stressing?

This hour-long course is designed for freelancers who have a few clients under their belt, are getting paid, but still feel anxious about paying bills every month. It will give you the knowledge to feel financially secure, make better purchase decisions, and get you on track to building wealth. Finally, you'll find out how to work smarter, not harder.

We’ll go through...

 Mindset – 3 common blockers that can stop you from being financially successful.

 Net worth – It's time to focus on numbers that will give you real insight.

 Debt – Logical ways of getting out of debt can be a downer. You'll get a more motivating approach.

 Budget – Knowing your numbers can be the difference of 100s of 1,000s of dollars! Plus, you'll get a freelancer specific template.

 Passive income – What it is, how to get it, and what to expect.

 Investing – The first steps laid out for absolute beginners, with no confusing words.


“Great, easy to understand advice for anybody who wants to take financial control of their life, but is intimidated by the process.”
– Don DeWolfe CPA, CGA

Meet Your Teacher

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Yvonne Lines

Mindset Mentor for Lovin' Life!


Years ago, I used to go home, flip on the 'toob, watch hours of mindless tv, go to bed, get up, go to work, repeat. Finally, I got sick of it to the point that I decided to do something...

I read every leadership and development book I could grab. After 236 books, my mindset had changed so much, I was able to leave my steady job, build my own business, and still avoid an all-ramen diet. And now I can finally call myself a surfer and a motorbike adventurer.

I’m loving life and want to share what I’ve learned, so that you can live your best life too. 

I spend my time researching and learning nuggets of wisdom, give them a personal test drive, and if I find it useful, I’ll share it with you. My co... See full profile

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1. Welcome and introduction: wait. Have you been doing the financial freak out your stressed and anxious about how you're going to pay the bills? As freelancers? We don't have regular paychecks, so sometimes we're flush on sometimes not so much. This course is for you. If you are an established freelancer, you've got a few clients under your belt. You're getting paid, but you're still stressed and struggling with the bills. Anxiety is making you question. Is it worth it? And you're thinking there's got to be a better way? Well, there is a better way, and I want to lay it out for you. You'll learn why Just increasing your income may not be your answer. I'll give you an approach to getting out of debt. That's great for creative people. You'll see how to get a real overview of your actual numbers. I'll even give you a useful template to get you started and will discuss how to get you set up for the long term. On the phone lines, I've read hundreds of books and consumed other media, all on leadership in development, with an emphasis on finance. I find it fascinating. I take the nuggets of wisdom that I learned. Give it a test drive in my own life. And if I find it useful, I'll share. I'll put it in my blawg or posted on you. Tube built several courses like this one years ago. I used to freelance did the financial free coat all the time. I had money coming in, but still I struggled. I even gave up. I worked full time for 10 years. Once I started learning more about finance, I switched back to freelance and I've been doing it for several years now with no freak outs. I want to walk you through what worked for me. I know it will help you to. I'm going to make the subject at simple as I can. I'm not a financial consultant, so I'll speak in plain English. I'll explain the concepts. I know beginners find confusing. I have to warn you, though finances a heavy subject. I'll break it down to make it easy, But still you have to be ready for it. So let me ask you Are you ready? I hope you're saying yes. Okay. Lets start. I'll see you in the next video. 2. Crushing mindset blockers: the financial freak out. I got you. I've been there. Most of us have been there at some point. The biggest reason why we freak out about finances is because we don't know our numbers. And without really understanding what's coming in, what's going out exactly, then it's really hard to make financial decisions. I mean, we don't know whether we can take another job or not Take another job or renting office space or not renting office space. Whatever it ISS, it's really hard to make that decision if you don't know what your numbers are. And on top of that, how are you going to be prepared for maybe a few months that are a little bit more tight than you are hoping for? Perhaps you didn't get the paycheck you were expecting on time, or there's an unexpected expense with freelancers. You don't have that regular paycheck, so we're gonna be more prepared than the average person to go through those tough spots when they come up. Let's look at why we may not know where numbers as well as we should. There are a lot of money, mind sought blockers that could be getting in your way or some limiting beliefs that could be stopping you from really figuring it out. But trust me, if you can figure out how to run a freelance business, you can get clients. You could do the work. He can get paid. Then you can figure out your finances, too. I mean, if you can figure out how to find and run this video and learn from it, you can figure out your finances. We're all capable of this. I want to take a really quick look at three common money blockers that may be holding you back. Now these are pretty common for creative freelancers, and if you're finding that you haven't taken the steps to work through your finances, this may be a reason, and it's really important to tackle these issues. Get over these blockers before China to get into the how of figuring out your finances. If you don't take care of this, you're not going to be successful down the road. So let's look at the 1st 1 If you are saying things like money is too complicated, I can't be bothered is confusing. I'm a creative person. I wasn't born with math skills. Well, you know what? None of us were born with mass skills. Nobody comes out of the womb counting 1234 and adding and subtracting. You learn it. You learn it as you grow, so I can guarantee you it's so easy to make it overly complicated. So many people that talk to really wise people, accountants and finance Cruz and they and read intelligent books that are disputing it. Words you don't understand. If that's your experience, then come down a level. Start at the basics. You don't have to start up here. That is complicated. We're not like hedge fund managers here. We just want to do the basics, and that is adding and subtracting. And you are perfectly capable of taking care of that and figuring it out. So if you're thinking that it's too complicated, come down a level. Start with the basics. The second money blocker I want to take a quick look at is the thought of money being evil . You may have heard the term running is the root of all evil. Now, if you're feeling this way and associating money with people who are greedy and taking advantage of their power and thinking. You don't want to be part of that world. You don't want to be an evil person, and money is going to make you that then I can guarantee you you're going to avoid money like the plague. But money is a tool. It's not good. It's not bad. It's a tool. What you do with it is your choice, and you could do really good things with it, or you could do really evil things with it. So this is something that you are thinking. It may have been passed down to you from. Your parents are from generations, so it's going to be a difficult one to get over. But you can get over it. So one of things you can do to get over this blocker is to consider a goal that you might have something that's really going to motivate you. So if you had tons of money, you might want to put it towards the cure for cancer or trying to help people who are in poverty. But let's think a little bit closer to home. Maybe there is somebody who is someone you really care about who's not well, and you would like to take care of them. Money can help you do that, even if you're just trying to get some a calming sense, less stress in your life Money can help you do that, trying to refocus instead of thinking about all the horrible things that money has accomplished about you've seen that you witnessed that. You've been privy to think of all the good things that money has accomplished and make yourself your own goal that will keep you motivated. Let's take a quick look at another money blocker that is pretty common for creative freelancers. It's the starving artist syndrome. If you're feeling like you have to sacrifice yourself for your art or in order to be really true to your art, you can't involve being paid for it. Then that is not a job that is not freelance work. That is a hobby that you're hoarding and you're keeping to yourself. You're not sharing with the world. If, however, you're adding value to this world with you art light, Think about all the musicians or entertainers, actors, fashion designers, graphic designers, writers, people who are sharing their art, their giving value to the world. If that's you you won't need to be compensated for that. There's no reason why you should be doing that for free or not For a decent amount of money . You're probably if you if this money blocker is something that you have been, you probably making it difficult for people to pay. Maybe you're not invoicing on time. People need to get invoices right away. It makes that makes it a lot easier. It's in their budget when you do it sooner rather than later. Maybe you're not asking for money. You're just saying, you know, give me a random amount. Whatever you feel is best, give them a number. Make it easy for them. Tell them how to pay you. Clarity is kind. Make it easy for people people want to contribute. Nobody wants to leave you there starving. If they are enjoying your art, they will happily compensate you for it. And it's up to you to make it easy for them to do so. If you want to know more about how your mindset maybe holding you back. James Webb More has a great podcast that I'd recommend is called Mind your Business. Once you master these money walkers you get past your limiting beliefs on the rest is quite easy. But if you don't get past these money blockers, the rest is really not going to matter. So start here. If you feel like one of these or something else is getting your way, I want you to really analyze it, figure out where it's coming from, figure out how you personally can get beyond it, and then when you're at that stage, then I hope to see you in the next video and we'll talk about what to do. 3. Increasing your net worth: I think in this video we're going to be talking about net worth and profits and how it affects your financial well being. So if you are like most freelancers in business for yourself, a sole proprietor and you file one tax return so your personal in your work tax return together, then you're going to be looking at Network. You're looking at profit if you have a separate business. So if you are incorporated, you do two separate tax returns. Maybe you've got a couple employees, or if you're just interested in knowing the difference between your work life, your work profits and your personal finances, your network for the purpose of this video will use the words net worth and profit interchangeably. So most people actually don't focus on network their profits. They focus on the wrong part of the equation. They focus on their income or the revenue, and then they wonder why they've got lots of money coming in. But it feels like they're still struggling like they look at it on paper and think, Oh, this is all really good. But you had I'm doing the financial freak out. Everybody, what's going up? Looking at income and revenue without considering expenses is really irrelevant. It just gives you a random number. Maybe good may be bad. You don't know. For example, let's say you're making ah 100 K a year. That's a lot of money, right? Maybe it is. Maybe it is that you don't know if your expenses are also 100 k a year, then you you're working an awful lot for zero money, so it's not good at all. So that's why you gonna look at for go further than your income or revenue and consider your expenses. And that's how we'll figure out your network for profit to figure out your net worth. You take all of your assets and then subtract all of your liabilities. And then it will be the number that you're left with to figure out what your assets are. These are the things that you could sell for a financial value so it could be your investments or what's in your savings account. Maybe you've got some collectibles that are worth something. Some equipment. Maybe you've got some fancy photography equipment. Your vehicle perhaps, um, property. All those things that you could put a number on your business could also be considered an asset if somebody could buy it and run it without you. If you can walk away and it will run on its own and somebody would pay for that, then it's an asset. So let's look at liabilities. This is the US This is everything that you own. So this is if you have any debt or loans, don't forget your mortgage. If you have one, is also debt taxes or another liability. Both your income tax. And if you're charging sales tax, if you've got contracts or memberships or subscriptions, things that you pay monthly that you plan on continuing, for instance, your cellphone thes air also expenses that things that you owe and will be under your liabilities list. So if you take all your assets and minus those liabilities, then you're left with your network and for business. If you take all your revenue and minus your expenses, then you're left with your profits. So something I hear often from freelancers and anybody who doesn't have a regular paycheck and regular expenses is that they really don't know what money is going to come in every month and what expenses need to go out every month. So I want you to evaluate your net worth every single month's end of the month or beginning in the next month. Whatever works better for you, but it's really important to look at it every single month. Because you're right. It fluctuates from month to month. It could be high, could be low. But after you do it for about four or five months, you're going to see a pattern. You're going to see whether your net worth is increasing or decreasing, and that's going to give you a really good idea of what you need to do next. So if you're not worth, is increasing congratulations but also a way to go. Your next step is to figure out what pace is increasing at and if that's acceptable to you . If you want to make it go a little bit faster or if you're good with it and if it's decreasing, then we're going to change something up because if it's continually decreasing, then it's only going to get worse and worse. And every month you're going to feel warm or stress. I want to give you an example of how this works in real life now, years and years ago, I used to be a graphic designer freelancing with a magazine, and I'm going to give you some pretend numbers here just to make it easy. I was building about 4.5 $1000 an issue, and there were 10 issues a year, so that comes to about $45,000 a year. I had other finance workers well throughout the year, and that total about $15,000 a year. So annually I was making about $60,000 You can already see, though for month to month my income was really buried. So let's look at my expenses. I had a studio, which was $1000 a month, so that's $12,000 a year. I had rent at home as well, which was about $1200 a month so $14,400 a year taxes that I paid not monthly but quarterly at 3.5 $1000 1/4. So $14,000 a year. I have business expenses like my phone and Internet on software and advertising insurance, and all that came to about $500 a month. So $6000 a year. I had some outside costs as well. These were really variable. So some jobs I needed to cover the printing costs. Others I had to hire out other freelancers or professional services equipment as well. I didn't have to buy a new computer every year, but every few years that needed to be some sort of upgrade. So that came to about $3000 a year and transportation. At that time, I was still riding my bicycle everywhere, so my transportation was pretty cheap. But I still had to pay for cabs and the odd car rental and transit. So about $200 a month, which is $2400 a year now add up all those annual costs, and we get to $51,800 for the year. Subtract that from the $60,000 I was making an income. We have $8200 for everything else. Now. Everything else includes food, clothes, entertainment, gifts, vacation help, any debt repayment that works out to $683 a month. That is not a lot of money. We're gonna call that are discretionary income because it's a little bit more flexible. I mean, yes, I have to eat. Of course, that's expensive, but I could e rama noodles or I could go out to a fancy restaurant, so we have some flexibility in there. So how does all this work with network? Let's say I started my month with $0. No. Zero is actually not bad, even though it sounds like Oh my God, zero. It's nothing, but a lot of people start with less because you might have some student that you need to take care of. You might have a big mortgage. You have to take care of deck and really weigh on you and cause you stress out even more. But let's say for the scenario, we're starting with $0. We go through the whole month, all our income and expenses, and we managed to stay within that $683 we end the month also with $0 no month to month. That's going to change. You're gonna be a little higher, little lower, probably a lot lower, but at the end of the year, you end up with $0. Okay, congratulations. You have gone into debt further, but you need to do better than that if you don't want the anxiety about how you're going to pay your next bill. So that's narrow. Even though I started with $60,000 in income after all the expenses and trying to fit in everything else in that $683 I was still pretty stressed. There are two things that we can do in this situation. Either increase the money coming in or decrease the money coming out. There are only two options. So if you want to increase the money coming in, then you've either got Teoh charge more, take a more work, maybe get a new client or find another source of income that can add to what's coming in. To decrease the money going out. You have to look at your expenses. In that scenario that I just gave you, there was $1000 a month studio expense, so I loved going into that studio. But I didn't really need Teoh. I also have the option of working from home. So for $1000 a month, I gave up the studio. I could then say, split that money in half, take a little vacation with $500 worth of it. Spend it on things that I have a little bit more wiggle room in my discretionary income and then also take the other half and put that towards my network. So on average, at the end of each month, I'd end up with an extra $500. Now that is still going to be a little bit stressful. But after several months and after a year, it grows. So after year it was $6000 then at that point you can invest it and have a gross more. But after several years, you're getting the idea like there's a lot more wiggle room, and there there's some comfort that stress level is going to come down. The financial freakouts are going to happen is often It gets a lot easier now. There's a great book on this subject. It is called profit first by Mike McCalla. Becks, if you're interested in going deeper into what we were just talking about in the highly recommend it just to quickly recap this video, we want to focus on net worth or profits instead of income A revenue, and we want to evaluate it monthly so we can see whether it's increasing, decreasing or staying the same. I'll see you in the next video. 4. Eliminating high interest debt: way to talk about the D word that now I know that this topic can cause a lot of negativity for people. But it can be a big contributor to why you might have that freak out. So it's important that we worked through it, tackle it so thank you in advance for sticking with me in this video. Now, if you have high interest that we're going to go through a few different approaches on how to solve that problem for you. If you've got low interest at so under, say about 4% or so, such as your mortgage or your student loan, that sort of thing, I'm going to give you a couple options option. A. If you feel comfortable with the low interest at, it's not causing anxiety. You can pay the minimum no problem, and you want to wait on that until we talk about investments, A couple of videos from here, then we'll do that. We'll address it then. But if that low interest that is causing you some of the freak out some anxiety, it's stressing you you feeling like it's an anchor. It's weighing on you. You're feeling a little bit stuck because of it or you're you've got a fear like interest rates could go up and you're gonna be kind of screwed. Then we're going to tackle that along with the rest of your debt in this video here. So let's discuss three different approaches for tackling that. The first approach is called consolidation. Now. I don't recommend this for anybody. It makes the most logical sense, but it doesn't factor in human nature. Consolidation basically takes your high interest at and puts it into one grouping with your lowest interest at. So, for example, you could take your credit card debt and added onto your mortgage. Then Olsen who your credit cards available again. Let's go shopping, and what happens is your mortgage just gets larger and larger and larger. You don't have investments to counterbalance it. The bank can actually come in and take your home away. Let's say interest rate goes up. You are slow with work for a few months. You can't pay it, your homes gone. So consolidation is some really risky stuff because it feels like somebody's waves of my magic wand and your debts gone. But that's not actually the case. And once it's out of sight. It's kind of out of mind and you don't focus on it, and you end up getting deeper and deeper into the hole, so we don't like that approach. This next approach is also very logical. We'll call it high interest first, so it makes a lot of sense, but it's not very motivating, so it might work for some people. You can decide for works for you. Basically. You look at your debt categories. Decide which one has the highest interest. It's probably a credit card, maybe a department store card, which, whichever one's the highest, is charging you the most annually. You prioritize that one, pay that one off first and pay the mid alone. Everything else. Reason it was not very motivating is because that one might be pretty hard to pay off. So it will take you some time, and it will be slow to see results. But it does make a lot of sense, right to pay off the highest interest first. Then, once you've got that one paid off, then you can roll that one into the next one into the next highest in the next highest and so on let me tell you about the snowball approach. If you're a creative person, then you're probably more emotionally driven than you are. A logical So this might work for you. Instead of prioritizing your debt categories by the highest interest rate, you prioritize them by what's easiest to pay off. So maybe it's a credit card or a line of credit. Whatever it ISS, what's going to happen? The fastest. What's going to be the easiest? What's going to be the most motivating? So pay the minimum, everything else. Pay off easy one. First, make sure you celebrate. Reward yourself for this achievement. Maybe do a little happy dance. Maybe you celebrate with friends. Whatever it ISS, reward yourself and then take what you would have put in the first desh category. Moving onto the 2nd 1 Pay that one off, pay the minimum. Everything else you're rolling one category into the next one, so things are going to go a little bit faster. This is like the snowball picking up more and more snow and picking up more momentum is you go and then you get into the 3rd 1 and things go faster again. Make sure you celebrate every time you pay off one of the used at categories. Let me tell you about my friend she's got. She's had her own business for quite a number of years and doing well, but she also has quite a bit of debt. Now she's in her forties, starting to think about her future, her retirement. And is this all going Teoh Pan Open? It's time to get rid of her death. It's time to take things a little bit more seriously, but she's tried a couple of the other approaches, and they haven't worked for her. So I told her about the snowball effect and she thought right away that it could actually work. So she tried it, and within a couple months she gave me attack. She was doing her little happy dance. She was like she was thrilled that she had paid off her first credit card and then she was going to move on to her next that category and so on and so on. She was really looking forward to like she's looking forward to paying off her debt. That's pretty fantastic, right? Who does that? So the snowball approach could be really motivating and I encourage you to give it a try. I'm guessing you're probably wondering well how my supposed Teoh get the money to put towards the stubble effect. So in the last video, we talked about your net worth and how to make some adjustments to make sure that you're increasing it month over month, you can take some of the adjustments that you learned from there and use that money towards your paying down your debt. The other thing I want you look at is on a smaller scale. The things that happened that seem insignificant because they're, you know, small amounts of money. But they're recurring because every time something is happening frequently it adds up to something significant. So this might be maybe forgot some subscriptions that you're not really enjoying anymore, a membership that you're not really using, even utilities that you could cut down to the basic utilities. Maybe you don't need the high end stuff. Evaluate. Figure out. If there's something that you can cut back on something that you're not going to miss too much, you may have heard of something called the law factor. It's pretty common for a lot of people to have a necks pensive lodge, a expensive coffee on a daily basis. Maybe you're spending $5 day on your lot if that's something that is really important to you, and you choose to do that after factoring in the everything else. Great, Go for it. I love coffee, I get you. But if it's something that is not that significant to you and you can get your coffee elsewhere for maybe a dollar a day, maybe you're making it at home for that, Then you're saving $4 a day right there. Perhaps you only do that during the week. Still like to have your expensive lottery on weekends, whatever. But $4 a day during the week adds up to $20 a week, which adds up to $80 a month, which adds up to almost $1000 a year. So you can see how those small expenses that are recurring regularly can really add up to something significant. And if you have several of them, then that's a lot of money. Every year I want to caution you, though, do something sustainable. If you're feeling really deprived, you cut back to the point where you're just really not enjoying things anymore, then you've gone too far. At some point you're going to break, so to do something sustainable do stuff that you're not really going to miss that much. Maybe switch it out with something similar that cost less and build these habits in tiny steps. You can space the moat, maybe try one thing one month and another thing the next month and so on. You don't have to do it all at once. This is habit building. It takes time. So do small, tiny steps until you get there. Next topic under the D word is line of credit. It's pretty common for freelancers. Toe have a line of credit, especially if you're just starting out because it helps you get through. The leaner months helps you stay calm instead of freaking out. When things aren't all coming together, however, it can also be a cause of the freak out because you have to pay it back. So I only want you to start using a line of credit If you're at the stage where you've got your net worth increasing month over month and you've already got the snowball going on paying down your debt. Maybe your line of credit is part of that. That so it could be really helpful in smoothing out the lean months until you've got your own emergency fund set up ongoing but couldn't also be part of the freak out. So be very cautious about this line of credit. Let's do a quick recap. Choose an approach, possibly the snowball approach to pay down your debt and keep keep chipping away at it. Also, look at your recurring expenses. That may seem insignificant, but they do really add up and they'll help you get out of debt pretty quickly. So thank you so much for sticking through this video. I know debt is a tough subject to get through, so kudos to you for dealing with it, and I'll see you in the next video. 5. Know your numbers: wait did the D word. Now it's time for the B word budget. Now, this topic can also be pretty scary for a lot of people. You don't want to just keep your head in the sand and not know. But I guarantee you, once you know your numbers, it's so much easier to deal with. Sometimes our imagination can run wild and take us to some dark places. It might not be anywhere near as bad as you think. Let me pretty good might be better than you think. Once you know your numbers, you're going to know what money is coming in, what Monday is going out and you'll be able to make some better conscious choices. You might even have a realization. Our surprise here in there. I know I did. I was shocked to find out how much money I actually spend on entertainment. I spend a lot going out to restaurants with my friends. Now I really value time with my friends so I can choose to continue. But every so often I want to save up for something else, something that's important, like a vacation or what not? In which case I know there's a substantial amount of money going towards restaurants. I can pull from that, and I can still spend time with my friends. They're happy to go for a walk or something that doesn't cost money. After about four or five months of doing a budget yourself, you're going to get a really good idea of what's going on. You're going to be able to make sure that the money coming in is higher than the money going out. And it's going to force you to actually count the money that you've got rather than the money that you're expecting. I know sometimes it's freelancers were like, Well, I'm expecting it was checked, come in. So let's go spend some money and then the check actually does come in. Woo. Let's go spend some money so we're double dipping on one end. Also different APS. You might have something from your bank or another place that is doing a budget for you automatically great, but there's a couple issues with that. When it's done automatically for you, you're not really forced to pay attention. You might not be fully aware of what's going on. It's just it's a little bit too easy, so doing it yourself makes you bring some awareness to it. The other reason that doesn't always work is it doesn't always connect everything from every source of income or expense. Sometimes it only does what's in your bank accounts. For instance, it doesn't connect you credit cards or investments or other sources or other expenses. So doing a budget yourself monthly is going to give you really good overview of everything . Kudos to you to use accounting software. Still, transfer those numbers to your one overarching budget so you can see it all in one place. You don't need all the specifics just enough so that you get a good overview. If you're new to budgeting, I want to make sure that you're keeping it really simple. But when you capture everything in one place, but you don't need to get too specific, you can grow into the details later. This is something that you should be able to do monthly, and it should only take about 30 minutes or so. So the first time you do it it might take a little bit longer, of course, but in general, 30 minutes and that's it. You're done so It's not something to dread, it's and it should be an easy process if you're keeping things simple enough. Now, if you've tried to budget before, you may have heard that using cash is a really good way to do it. So no credit, only cash. Cash is easy to see. You can put into different jars for different categories, and once it's gone, you know you've hit your limit. You start stop spending. If that works for you. Fantastic, keep going. But personally, I find that cash is really hard to track. Yes, I keep my receipts might need them for tax reasons, but in general I don't look at them unless you really have to. Credit And debit, however, attracts everything for you. So at the end of the month, I could go through my statements and I can see exactly what purchase every purchase that I've made, and it's really easy to track, so you might find that easier. It's easy to see what money is coming in and what money is going out. Let's get into how to budget. I made this really easy for you. I've made an Excel spreadsheet. I've also done a Google version, you can download it and use that as your starting point. This is your template designed specifically for this court. So if you're finding that what you're hearing is resonating with you when this is a good template to start from still you're going to want to customize it for yourself so you'll see some generic names you can put in what's relevant to you. You may also want to add a row here and there at some notes. Whatever works, do you just keep it simple? I also want you to start wherever you are in the year. This budget is set up to start in January, but if you're starting in March or September, that's fine. To start in that month, Look at the left side, these air your categories so we've got your income. What's coming in your expenses? What's going out? And, of course, I've included a section for your network, so you could monitor that every month as well. Now let's look at the top, the columns so it's done monthly, and at the end of the year you've got your year to date totals. You've got your monthly average and you've got your forecast to the end of the year, so you'll be able to gauge what is going to come in and go out now. Are you going to fit the budget till the end of the year? So this is what you expect. But if you're not really sure how to four past your feeling like you are just picking random numbers, try taking a look at your tax return from last year and at about 5% to it. Because things generally go up year over year, that should be a pretty good guide. So to fill in all the cells for that month, go through all your bank accounts, PayPal, credit card statements, line by line. Make sure you're capturing everything, put it in the right categories. You're going to need to grab a calculator and add up her category, but after that, the template will take care of the rest of the math for you. The last up, what's really important is to evaluate it monthly. You're a few questions that may help you evaluate it. Number. What is the money coming in? More than the money going out. Very important. Number two. Are you forecasted numbers realistic now, every month you're going to have more information, so you probably want to adjust them every month and number three. Now that you know your numbers, are you spending where you really want to be spending makesem conscious choices? Where would you adjust? Here's one more reminder to keep it simple. If you're saying anything like I just can't be bothered with this, then is probably because you've over complicated things somewhere. Maybe you have too many accounts open or too many credit cards. You've got too many sources coming into this budget. Or maybe you've got a budget already started and it's got just way too many categories in it, and you're not sure where to put things. And it's just taking forever every month to get through it, whatever it is simplified. If it's taking more than about 30 minutes, then you can cut back somewhere. It's only once you've mastered it on a simple level that you can start adding to it and you'll know you've mastered it. If, after a few months you start to actually look forward to doing your budget, you're gonna want to know what your numbers are. Is your net worth growing, starting to be like I want to go do my budget. If you're starting to feel like that, then you can add to it. You can add a little bit more specifics in the categories. A great long term goal for this would be to have a category a row for each line item on your tax return, because that makes finding your taxes really easy at the end of the year. Okay, so that's the end of the tough stuff. You've done the debt you've done the budget like that's, you know, you come really far. Congratulations, I promise. The next video, we'll be way more fun. It's one of my favorites. See you there. 6. Setting up passive income: the way I love the topic of this video. It's passive income. Have you ever heard somebody saying you should work smarter, not harder, and then wondered like What the heck is on me? How am I supposed to do that? Well, passive income is definitely in the work, smarter part of that equation. It's about getting your money work for you instead of the other way around. I have a warning for you, though. There's nothing get rich quick about passive income. It takes a lot of effort upfront. But once you get something established, it's only a little bit of effort to keep it going. That's the passive part of it. And then you get continuous long term payments. That's the income side of it. However, it is difficult to start. There's nothing passive about the beginning. But once you get something figured out and set up, then you can do more of it and it becomes a lot easier. The number one source of passive income is investments. That's probably not a surprise, right? That's why so many people try heart so hard to build their investment portfolio for the retirement. Unless, of course, they have a pension, but as a freelancer is not likely that you have a pension. We're going to be talking about investments in the next video. Another great source of passive income is to have a business, and as a freelancer you have an advantage. You already make things so you're on the edge of having a business. If you can somehow set up an automated system so that you can walk away from what you do and it pretty much runs itself, then you've got a business. I'm guessing at the moment you're trading time for money. So hours for dollars, even if you work on a per project basis, it's still time based, and that's really limiting. I mean, there's only so many hours during the day. There's only so much time we can put into our work. And we want to work smarter, not harder. So unless you're charging thousands of dollars per hour and I don't know anybody who does, I want you start thinking about what you can set up that will pretty much run itself. Let me give you a few examples you've probably heard of etc dot com. It's an online marketplace for people to sell art and craft items. So if you can create something digital that you can sell So, for example, a presentation template that you've designed, or a nil street, a greeting card or maybe a piece of artwork that somebody can download, frame and hang on their wall. If it's digital, then there's not much work to do after the sale. That's the passive part of it. That sounds pretty good, right? Let me give me four more examples, especially if you're a writer. My accountant writes on the side and has for years, and he had written a few novels. When self publishing became popular, he decided to put them out there. Now he doesn't make tons of money off of it, but it's enough for him to go on a little vacation every year. Not too bad. I've got another friend who used to create textbooks to help people learn English, and he did it full time for years. He doesn't do it so much anymore. Maybe a few updates here and there, but he still gets the royalties from it, so it was paid when he created it, and now he's living off some royalties, which is pretty good can. He still needs a few other projects to keep going, but it's a substantial part of his income speaking royalties. I've got another friend who has a special skill. He's a championship water sphere now. Many years ago, a movie was being made not too far from here, not too far from Toronto, and the crew required a water skiing course to be built to be set up for the film. So he did that. He worked the crew to set up the course. But then he also drove the boat. So he was actually a stunt double in the film, which means Hiss name was in the credits. So not only was he paid when he set up the course and helped build the film, but every time this movie plays on TV, he gets royalty checks about every six months or so. That's only a few 100 bucks here and there. But it seems like free money, doesn't it? That's pretty good. And for me, what you watch you right now is a form of passive income. These online courses take a while the set up to research it after film, it edit it, publishing it let people know about it, but then it's out there and I make. I'm only making about 50 to $100 a month at the moment, but it is growing, and lots of people do this pretty much full time, and they get the equivalent of a full time salary for it. So there's lots of ideas there for you. One thing that's great about being a free and answer is in between projects, you often have some downtime, and after you've taken little break, you want to be productive again. So building a side business between projects can work out really well. If you want more ideas on, what's your side business he could build? There's a great podcast by Crisp Gilboa. It's called the Side Hustle School. He shares lots of people's stories of what they do on the side, and some of them are really creative. And, of course, when it comes to passive income, you should definitely read the book by Tim Ferriss called Four Hour Work Week. He really explains well, how to set up automatic systems. Just be selective about what do you think will work for you? E. I want to share a little bit about my story with you. Ages ago, I used to free. That's I did it for years and every time work got a little bit slow, I did the financial freak out. I couldn't just enjoy the downtime. I got stressed every single time so that I went and I worked full time for about 10 years now. More recently, for the past few years I've been working freelance again. It took a little while to set up, but I have not done the financial freak out once. I have not been stressed about money at all on one of the biggest differences between before and now is my passive income. In fact, one of my investments pays my rent for me every month. That gives me a lot of security. It means I don't have to stress out when work is slow. And once I can build my passive income to cover all my basic needs for the month. So not my discretionary spending, but just things like, well, the things that I need. So about $4000 a month, then I can choose whether I want to work with clients and trade my time for money or if I want to just work on smart life, my business, that's a pretty good choice, right? Having that security really makes a difference. I've also got to tell you right before I started filming this video today, I got an email from PayPal saying, I've just been paid for a course kind of serendipitous anyway. It's only just a little bit of money, but seriously, how sweet is that? 7. Getting started with investing: topic of this video is investing. If you're new to investing or still a beginner, then I think you'll get a lot out of this one. Now. It's funny. I call myself online set mentor, which means I talk about money, blockers or perspectives that people have around money. But what people generally ask me are is more 10 coast questions They asked me about investing. Now. I am not a qualified adviser. I do not have a formal background in investing. But the reason people ask me is because I'll explain things in plain English that the average person can understand. It wasn't that long ago that I was also a beginner, so I know how overwhelming the subject could be. My goal of this video is to get you motivated to learn more and get you started and investing. Often. People don't start because they find it too complicated and it is complicated. It could be extremely confusing, but you don't have to start at the top start simply, I do want to encourage you, though continuous education in this area is going to be really important fact, the more wealth you have, the better educated on the subject you should be. It can seriously be the difference of hundreds of thousands of dollars. So education this area is really important. However, we're not starting with hundreds of thousands of dollars, we can start simply, And the reason I'm urging you to start is because the earlier you start, the more advantage you can take of this thing called compound Interest. Compounding means that the interest earned on your original investment earns more interest on itself, which then adds up and earns more interests on the new amount. And that adds up and earns more in just on that amount and so on and so on. But it takes quite a bit of time to really see the results, which is why I really want you to start early. Let me give me an example. Let's say you invest $100 you're earning, say, 6% interest. So after one year you have $106. But after two years, instead of having $112 you have $112.36. Now I know that doesn't seem like a lot, but after three years instead of $118. You have $119.10. Now, after 12 years, at 6% annually, you'll more than double that $100 initial investment to be more than $200. 12 years seems like a long time, but if that were a larger amount to start with and you left it for even longer than 12 years, it will add up to a really significant amount. That's how you get your money working for you instead of the other way around. Now notice. I didn't say Start right now, there's a reason for that. Start as soon as you've paid off your high interest debt. So anything over say, 45% Prioritize that. Get that paid off because that interest can really come back and hurt you. Someone knowing that you may be wondering, Well, why don't I pay off all my debt? Milo. Interested as well before I start investing, if you're paying, say, 4% on a debt, your mortgage or whatever, and you're earning 6% on an investment than your ahead by 2% now I know that there's often a lot of emotion that gets tied to money, So it's not all about the logic. So, yes, you be ahead by 2%. But if that debt is stressing you out, if it's feeling like an anchor, if it feels like you can't do things because you've got to take care of paying off all your debt first, then then focus on what is stressing. You take care of that because we don't need any more anxiety in our lives. Now let me give you an example. When I used to work full time, I owned a home as well. Now I didn't have a huge mortgage, but I felt like I didn't have too many options until I got that mortgage paid off and it was really weighing on me. There are some things that I wanted to do, but I didn't want to risk having the bank be able to come and take my home, especially when I was so close to having paid off. So I focused on paying it off, and then I felt like I had way more freedom and options in life. In fact, when I went to leave my full time job, I did it with the peace of mind. and confidence of knowing that I own my home outright and the bank couldn't take it from I felt really good. So I'm encouraging you to really think logically about investing to start early. But if it stresses you out, try to find some sort of balance between whether you're putting extra money towards your debt or starting your investments. Let's talk a bit about fees Now. We've already seen how small amounts of money that's recurring can really add up to something significant. I want to make sure that you're looking for something that has low fees but still a decent return. If you have something with a high return but it has high fees, then you're just taking more risk. A quick side note here, higher returns generally means you are taking on more risk. So in the last example, we talked about a 6% return. Now I'm recording this in 2019. Interest rates are low. They're expected to stay low, so 6% is not very high, but is probably realistic for the next few years. At least that's going to fluctuate over time, depending on when you're watching this. So that's one of the reasons why it's important to continuously educate yourself because the market changes. So let's face this scenario on a 6% return, let's say you lose about 2% to inflation. That only leads you with 4%. If you're losing another 1 to 2% on top of that to management fees, then you love with a really low growth rate. Now those fees air charged when you buy or sell fun may be charged by your bank, or you may be paying them to somebody who is managing that for you ready to talk about where to invest? I want to give you three options. All three of these are pretty basic. Option one will call self directed, since you can do it yourself online through your bank or an investment company. If you're someone who wants to buy a few funds and hang on to them for the long term, at least say, five years or longer than index funds and DTs, maybe a good option for you generally perform well with very low fees in index measures the stock performance of a large group of companies you've probably heard of the S and P 500. That's 500 of the best performing public companies across the states. So long term, it's very likely to do well. You don't buy the index itself. You buy index funds. The funds track the index closely, which means they will perform similarly. But they often focus on companies that could be categorized in various areas. That these areas could be different industry sectors like technology, the environment or real estate. Or they could be weighted towards different growth potential, which also means various levels of risk. Or they could be diversified by country or various other factors. You want to buy a few different funds so that you can diversify. You don't want all your eggs in one basket. This handful of different funds is called the portfolio. E. G s is short for exchange traded funds. They're very similar to index funds, and the two are often referred to interchangeably. E T s are easier and faster to trade than index funds, so they're slightly more expensive. But for beginner, thes two are essentially the same. Let's get into how to buy funds. If you're already online banking, you could likely set up a trading account on your current bank. Each bank will be a little bit different, but they'll have instructions and the help desk. Or you can go to the website of an investing company such as vanguard dot com and set yourself up there. Both the bank and an investing company will have tons of information, so remember to keep it simple to start, try a small amount of first and then add to it as your knowledge. Gross. If you want more info to see if index funds and HF funds for you, there's a great book by Tony Robbins called Money Master. The Game. It's long winded, but basically he interviews top investors and they'll say pretty much the same thing. Just buy index funds, make sure they are low risk and have low fees and hang on to them for as long as possible. Let's look at Option two if you're not comfortable doing this by yourself, and I totally get that. It can be overwhelming, but I want you to start. So if you're more comfortable going into your bank and talking to somebody about mutual funds, then you're going to pay a little bit more for it. Ask them about their fees. Make sure you're not paying too much, but it might be worthwhile for you to pay that extra money to have somebody walking through it. That adviser is going to ask you things like your comfort level when it comes to risk or what your goals are. Maybe you're wanting to buy a house in a few years or you've got a child going off to university. You've got to pay for their education or you're thinking longer term for your retirement. Once you establish some financial goals trying to match a portfolio that's specific to you . But maybe you're not ready for that option yet, either. Let's look at Option three. If you're just wanting to get your foot in the door and get started, and I still applaud you for that, then we're looking at a high interest savings account or this option you may only be looking at, say, a 2% gain from interest. That's approximately the same rate as inflation may be slightly less if you don't earn at least at the rate of inflation every year, then you're actually losing money with only a 2% interest rate investment. You're not gaining a lot, but 2%. Hey, it's still 2% and we've seen how small numbers can really add up over time. So high interest savings account is really great. If you want to put your money somewhere while you're building your education before you take the leap into another option or if you are a short term investor, maybe you're saving up for a vacation or house or you're trying to start in your business and you know that's going to cost you money. You want your money to be more liquid, which means you can cash it out very easily, or it's also good for if you're just trying to start building that habit now, have a building is good for all of these options. I think about every time you get a payment, I want you take a small piece of it and put it towards your investments. Whatever it is that you decide, just get in the habit of taking a little bit of your money every time you get paid and putting it towards your future. So there's three options for you, so the first option is self directed. The 2nd 1 is to pay a little bit of money, but have somebody do it for you. Those mutual funds and the third option is the high interest savings account. Just to get your foot in the door and get started. Get that habit going now. That was a lot of information to take it. So I want to give you a resource so you can review all this information. If you go toe wealth, simple dot com, click on learn and then go down to investing masterclass. Watch those videos. It's made for Canadians. But if you're watching this from another country, most of the information will still be relevant to you. It's set up for beginners, and it's even a little bit entertaining. Okay, taxes, so we'll make sure we're taking advantage of government programs. So in Canada, there's a thing called RSP so registered retirement savings plan. In the States, the equipment is a 401 K You're outside of these two countries. Your government probably have something for you as well, so that's a program. It's not a new investment in itself. You still need tohave investments within that program. The idea those incentives is that instead of paying income tax. Now you save your money within that program and pay that tax. When you take the money out, thinking that you're income will be much less in your retirement than it is currently while you're working, so they pay less tax on it. In the long run, there's another incentive that I want to talk about. It's a T. F s, a in Canada tax free savings account, or it's also called a Roth IRA In the states. This one is good for either short term or long term. You pay tax on your income before it goes into this account. But while it's in there as its earning interest, when you take the money out, you don't have to pay capital gains tax, which means the money that it's made while it was invested within the TFS A or a Roth IRA is not taxed When you take the money out. Those two programs are really fantastic, but keep in mind that they work in conjunction with your investments. They're not investments, then sells the account where you have your investment needs to be registered under one of these programs. Let's just recap a few of the key points from this video. I want to get serious about investing as soon as your high interest debt is paid off. Then you can take advantage of compounding interest. She was something that's really simple, but low fees and low risk until you have a better idea of what's going on. One of those three options that we discussed could work for you. The last point I really want to drive home is how important it is to continuously learn markets, change situations, change opportunities, change a bit of time spent Updating your education every few months can be the difference of hundreds of thousands of dollars. And the information you need is going to change as your wealth grows. So please put it a little effort to grow your knowledge at the same time. I'll see you in the next video. Where will recap a few key points from the course 8. Congratulations and recap: congratulations. He finished this course now. This topic of finances is really done, so I want you to give yourself an extra pat on the back for getting through it. Well done. Let's do a quick recap of what we talked about. We started with Mindset. We talked about how important it was to have a positive view of money before getting into any of the technical stuff. If you're thinking negatively about it in any way, you've got some money blockers. You're going to have a lot of trouble with the rest of it with taking action. Then we got into network, and we decided to look at net worth instead of looking at our income because it includes our expenses, which gives us a more realistic view. We talked about debt. The D word suggested the snowball approach to keep you motivated as you're trying to get out of debt. After that, we talked about doing a monthly budget and keeping all your numbers of one place so that you can see what's going on easily and on a monthly basis. And don't forget, you can download the template to get you started, and we got into passive income where you're putting in effort up front with a project or investments and then you can reap the rewards for the long term. Got into investing if you're just starting out. I gave me three options to get going. There's so many options, there's so many things you can do. But if you're just starting, there's three to just get your foot in the door. You've gained a lot of knowledge going through this course well done. But that's only the first step. You also have to take action. Of course. Right now that means forming some habit. So what do you start with? Some small steps and build on it. Start with something simple master that have it and then add to it. I want to make sure that your habits and your knowledge are continuously growing as you. Well, those building, I guarantee you, Once you know your numbers and have a sustainable plan, you're going to feel way more secure. And those financial freakouts will happen less and less and less and then disappear altogether. I hope you got a lot out of this course. I would love to hear from you, and he reviews comments or questions You want to leave on this platform or if you want to email me directly, I'm at yvonne dot lines at smart life dot tits. Thank you so much for spending your time with me all the best to you in your financial well being.