What are the best ways to manage finances as a consultant?

Know your hourly rate, and focus on improving this over time. As a consultant your time is your most valuable asset, so be clear how much return you aim for on your time. It's easy to short-change yourself, and give your time away for a low return, so be careful. The return is always uncertain, but still do the work to estimate the likely target reward and effort involved. Don't be afraid to say no, if the return is too low, and there are no future benefits. As you grow have the confidence to increase your hourly rate, and be more selective. Look also for ways to scale your impact, and scale your return, through automating, leveraging digital material and your team.

You must know your value. Have an hourly rate. That determines how much time you spend on pitching a specific solution. The value of the pitch must be more than your hourly rate. For example, if you are worth US$1,000/h, you must earn more than that if you spent an hour on a pitch, including preparation time. Always factor taxes and other costs into your costing of a project. It is not how much you bring in, but how much actually makes it into your pocket. The amount you earn is not the same as the amount you make. Focus on the 20% of clients that bring in 80% of your revenue, and turnover the other 80%. Not every client is worth the same time and effort.

Clarity comes from understanding, and to grow and refine your business you must know where you stand. Focus on your return after costs, and based on how much you need to put in. Be disciplined and have a system (app on phone, daily habit, spreadsheet practice), to ensure you see the true profit and value of your engagements. Be careful not to mix business and personal, and keep separate systems and accounts and payment methods to help you stay organised. Implement an invoicing code early, and invest in easy to use accounting software or apps that work for you. Be methodical, and follow the same practice each day, so make it easy to remember. At least monthly reflect on your numbers, and what the learnings and changes are.

Your value to client's is your greatest investment. Always invest in yourself, and your capability. You must believe in the value of expertise to provide a short-cut to growth and results. And model this with your own investment of time and money. The only investment that can never lose, is in yourself. So make a habit of regular time to learn, acquire new skills and frameworks. If you are always getting better, your practice will always thrive, and your client's will see value in investing their time and effort with you. If we stop growing we will quickly stagnate, and your skills will be inadequate to get you back on track.

Some people hide from their finances, but we all need a face our futures. Make your financial goal so exciting and compelling you are eager to achieve it. Aim Big and start now! Freedom, travel, new opportunities, no longer needing to work just for money. Start working on your plan, and taking action now. This requires saving and investment, but the secret is how you do it to live your best life, not sacrificing life to someday live. Know your goal, whether you want to have income in the medium term to enjoy life, or are willing to wait until you're old to enjoy it. The wealthy invest for income, and define their wealth through their passive investment income, whereas a pension aims to compound the value over a long time.

Managing finances as a consultant means planning. Set aside money for taxes and unexpected costs. Use apps to track earnings and spending. Invest in skills to stay competitive, and don't forget to plan for retirement—balance earning with smart savings.

Obtain a great CPA. Plan for the year and the quarter. Save for "dry seasons." Optimize tech for tracking. Re-evalutate often