When I started out as a freelancer, I thought the phrase, “You have to spend money to make money,” regarding self-employed business expenses was completely bogus. I believed it was a way for people to guilt me into buying something they were selling, with the threat of my own demise if I refused to buy it.
In retrospect, maybe I just read some poorly written sales pages, because who’d actually use that as a selling point? (I’m glad I stuck to my guns and didn’t buy from those people.) But as I’ve advanced in my self-employed career, and as my goals have gone from “make enough money to live on” to “buy a house” and “purchase custom branding and a unique website,” I’ve changed my opinion about the phrase.
From 2014 to 2015, I increased my income nearly four times. From 2015 to 2016, I increased it another 50 percent. And you know how I did it? It wasn’t from working more. (To be fair, I spent a ton of time traveling in 2014, so part of it was from working more, but I wasn’t working 60 hour weeks or anything.) It was mostly from spending money on my business, whether in supplies, books, software or training courses, to learn how to make my business more effective and purchase the tools I needed to do so.
I’ll break down my 2016 business expenses for you, so you can see what a growing freelancer invests in for success. I’ll also touch on my best investments — you’ll be surprised by one of them!
The Grand Total and the Breakdown
At the time of writing, it’s mid-December, so I don’t anticipate spending much more on my business. I’ve got a few coffee shop meetings lined up in the next few weeks, so I’ll spend a few dollars here and there on courtesy drinks, but that’s it. So, in 2016, my grand total of expenses came to $6,645.95. Here’s the breakdown:
- Contractors: $304.50
- Education and training: $2,297.68
- Employee benefits (e.g., health insurance): $2,045.89
- Coffee shops: $52.55
- Office supplies: $575.75
- Professional services: $936.07
- Travel: $99.90
- Bank fees: $50.00
- Credit card transaction fees: $168.91
- PayPal fees: $114.70
To be totally honest with you, even as I looked through the itemized expense list within FreshBooks, I didn’t see any expenses I wouldn’t have deemed necessary to the success of my business or the amount of total revenue I brought in this year. Maybe I could’ve done without hiring contractors via Upwork, but at the same time, the lessons I learned from that “waste” of money were super valuable.
The best money I spent was on education, training and professional services, including a business coach, online courses, books and software. A lot of this investment came in during the later part of the year, and if I don’t increase my income by at least another 50 percent next year because of what I’ve learned from them, I’ll be surprised.
I also invested in a decent desk chair. I never knew the value of a good desk chair until I finally coughed up the money to buy one that was actually comfortable enough to sit in all day long. Now, I can pound away at my business and client work and hardly notice the hours going by — it’s wonderful.
How Next Year Will Change
As far as next year goes, I don’t predict any major shifts in how I spend my money, but I’ll likely see an increase in every category. Health insurance always gets more expensive, office supplies will probably stay the same, I already have plans to travel more and, with the way education and training skyrocketed my business this year, I don’t think I’ll ever stop or slow down my investment in that area.
I realize this amount might seem high or low to some people, but as a solopreneur with no employees who works from home, my business expenses could easily be $0.00 in theory, so coughing up more than six grand feels like a lot to me. But it’s been worth every penny, and I wouldn’t change a thing.