Earn more, spend less

In 2014, I joined a startup company as its first employee.

Through that process, I was given ownership in the company in return for taking a lower salary.

The first thing the Alex (the founder) and I did together was calculate our own costs of living. I was just coming out of college, and I was used to living pretty cheap – I think I calculated my expenses to be around $2,200 per month.

That number (or very close to it) became my monthly salary so that we could be as efficient with the company's resources as possible.

And so, I continued to live cheaply.

While my friends and peers took entry level jobs paying them 2-3x as much as I made, upgraded their apartments, their wardrobes, and their cars, I worked on my laptop from home and ate ramen or fast food.

I lived with six other guys in a large house so that my rent and utilities would be low.

And eventually, we sold that company! Alex and I both made a little bit of money that I put away into a savings account.

Living cheaply is an entrepreneur's best friend

Since that time, I've continued to be pretty frugal.

I drive a 10-year old car and I've always been conscious of how much my rent costs (my budget apartment from 2016-2019 shown here). I've never paid for real office space, and I just don't buy many things.

It's a choice, but it's also a skill.

And as I've continued my own entrepreneurial journey over the last few years, that skill has served me well.

In the early years of freelancing, clients were few and far between. But expenses come every month just like clockwork!

It's obvious, but the higher your expenses, the more pressure you feel every month to find new clients and earn an income.

But the lower your expenses, the more optionality you have.

The beauty of optionality

Optionality is the ability to make choices. It means you have options.

A lot of people are drawn to freelancing or entrepreneurship because they want to increase their optionality.

They want to give themselves more freedom or flexibility.

We want the freedom to choose how we spend our time, who we spend our time with, where we spend that time, and how we run our businesses.

But when you feel the pressure to cover your expenses every month, you don't have much optionality. So if you started your business to INCREASE your optionality, you may begin to resent your choice of starting your business.

If it's freedom and flexibility you want, you need to create more optionality.

Two ways to increase your optionality

This week on Creative Elements, I speak with Jonathan Mendonsa, the co-founder and co-host of ChooseFI.

ChooseFI stands for "Choose Financial Independence" and Jonathan helps people master the personal finances so that they can achieve (and afford) the lives that they want.

Two of the major tenets of ChooseFI are exactly what increase your optionality:

1. Earn more
2. Spend less

That's it. Simple, right?

Of course we all want to earn more. And if we could turn it on like a switch, we'd do it in a heartbeat. But it may take some work to get there – building your reputation, finding higher-paying clients, or improving your skills.

So you may want to start by spending less. Find ways to decrease your monthly expenses – even if you don't think there's any place else to cut.

Look into your bank statements – do you see any recurring or subscription charges you don't need any more?

How often are you eating fast food or getting delivery instead of cooking at home?

Jonathan even goes into house hacking (cutting down or eliminating your housing expenses), selling your car, and more in this episode.

It may sound extreme, but this is exactly how you can increase your optionality.

And when you increase your optionality, you put yourself in a position to build the business you want and live the life you want.

Conclusion

The beauty of "earn more, spend less" is that you don't need to solely focus on one or the other. You can do both in tandem – and that REALLY accelerates your optionality.

Ask yourself if you are living the lifestyle you want. If you feel strapped for time, it's likely because you're trading that time for money so that you can afford the lifestyle you have in place.

If you want to buy back more of your own time, you can either earn more, or spend less. And my bet would be that spending less is in your control right now.

And when you adapt your lifestyle to require less cash to be happy, that's something you'll appreciate as your business grows and you have more cash (and more options) for how to live your life.

Enjoying Independent Creative? Subscribe to Work in Progress, my Sunday email newsletter.

Listen on Creative Elements:

Jonathan Mendonsa is the co-founder of the ChooseFI podcast.

Jonathan started his career as a pharmacist with $168,000 in student loans. He aggressively paid off the loans in 4.5 years and using the tenets of Financial Independence to cut his life expenses significantly.

In this episode, we talk about becoming debt free, how to drastically cut your living expenses, saving for retirement, investing, and why Financial Literacy can be the key to freedom.

Click here to listen to the episode

Connect with me:

• Subscribe to my Sunday newsletter for creatives
• Check out my weekly podcast, Creative Elements
• Connect on LinkedIn, Twitter, or Instagram

Jay Clouse is the creator of Freelancing School, which provides the training and community to help people make a living freelancing. He is also the founder of Unreal Collective, a community for founders, freelancers, and creators that runs a 12-week accelerator program.

Jay hosts Creative Elements, which interviews high-profile creators who have made their own independent living.

You can connect with Jay on Twitter @jayclouse or sign up for his Sunday newsletter for creatives at jayclouse.com.