Review: I Will Teach You to Be Rich

For freelancers, managing money comes with some unusual problems " beyond the typical issues that someone managing their personal finances might face. There are books and tools out there that make the process easier, including I Will Teach You To Be Rich, by Ramit Sethi.

The book focuses on solutions that you can put to work helping you with your personal finances immediately, unlike many personal finance books that are more about the theory of what you might do to change your current situation. In addition to writing an incredibly reliable book, Sethi agreed to answer a few questions about personal finances for freelancers.

And while Sethi's book focuses on personal financial decisions, it's clear that the techniques work just as well for the finances of a freelancer's business. He says, "Absolutely. Freelance income can be more sporadic than job income, but the tools I recommend are still applicable."

Income Is Just as Important as Expenses

The standard personal finance advice that you'll get if you're trying to balance your personal budget is that you need to cut back on expenses. Sethi takes a very different approach in his suggestions. Rather, he points to the income end of the equation, offering the fact that it's often much easier to bring in more income than it is to cut back on expenses. That is especially true for freelancers: most of us have cut expenses like a commute out of our budget already.

It's not out of the realm of the possible for freelancers to turn first to earning more money, either. For full-time freelancers, Sethi has some suggestions for bringing in more income:

Try to go further up the food chain for your clients and do higher-value work. Example: if you write blog articles for a client, suggest writing a sales letter for their flagship product/service.

Taking Care of Business

Beyond looking at increasing your income, Sethi recommends making sure that your finances are as automatic as possible, despite the fact that can be a tougher prospect for some of us than others.

Freelancers face financial constraints that many other people do not. Sethi notes,

…freelancers sometimes get paid on erratic, unpredictable schedules. This can make it tough to set up an automated bill payment/savings/retirement system as I advocate in my book." He adds, "You also need to make sure you're setting aside enough of your pay for income taxes. Freelancers are generally independent contractors meaning they must pay their own tax (quarterly or annually).

Taking the time to make sure that your finances work without you spending a lot of time messing with them is an important proposition, especially when actually running your freelance business can take up so much time, though. Sethi points to a more in-depth blog post he's written about techniques for freelancers and entrepreneurs looking to automate their finances. He also does offers up one addition to his very specific list of tools in I Will Teach You to be Rich: Freshbooks. "Freshbooks is fantastic for invoicing (which becomes a recurring task if you succeed at freelancing)."

From Part-Time to Full-Time

In I Will Teach You To Be Rich, Sethi makes it clear that personal finances aren't just about obsessing over your money and trying to find ways to squeeze a penny a little more. That means freeing up some time that you might otherwise be spending on trying to make your money go farther. A logical use of that time could be moving towards more regular freelancing gigs, or even going full-time into freelancing.

Transitioning from freelancing part-time to full-time can be an incredibly difficult financial decision. Sethi recommends two sections of his book specifically for freelancers making the switch: "Aside from the section on automation, I highly recommend chapter 9 ("A Rich Life") to full-time freelancers. This section talks about big-picture financial decisions like weddings, new vs. used cars, buying vs. renting, etc."