Freelancing Gives You A Better View of Time and Money

Freelancing drastically changes the way you view money. It changes how you budget your personal finances in comparison to a salaried job. Here’s how. 

Personal finance on a salary is all about expense optimization. The budget equation is income (i) minus expenses (e) equals surplus (s).

i - e = s.

This makes things like cooking at home, buying a fuel efficient car, and deal-hunting logical. If the income is fixed, then the only way to get more surplus is to decrease expenses. 

Personal finance as a freelancer, on the other hand, is all about income optimization. The budget equation is negative expenses (-e) plus income (i) equals surplus (s).

-e + i = s.

Even though these equations are basically the same thing mathematically, mentally, they’re completely different. This makes things like working more hours, making workflows more efficient, and increasing profit margin on projects logical. This isn’t to say that expense optimization is unimportant to the freelancer, but at a certain point, it becomes illogical. For example, the person on salary can spend an hour making themselves a delicious, healthy meal for $5 in food costs. The freelancer can do this too, but giving up an hour of work time to save $5 might not be worth it, when they could have made $30. What if they ordered delivery for $15 instead, spent the extra hour working to make $30, they would be up $15 instead of just $5. 

This is why I think everyone should freelance in some capacity. Control over the income portion of one’s personal finance equation is very empowering, and helps people see the value of their time.