How To Beat Inflation with Freelancing
Have you noticed the prices of everything going up lately?
I'm going to teach you how you can beat inflation with freelancing.
Inflation hit a 40 year high in November. In October, a report came out showing that inflation went up by about 6% for 2021, setting a new record. It hasn't been that high in decades.
Now that report was a little bit deceiving because true inflation is really somewhere in the +15% range when you include everything. The report excluded food and energy, which are a couple of the main things we spend money on.
When you add in those things along with things like lumber, rental cars, and vacation rentals, that increased in price by 30, 40, or 50 percent in 2021 alone, it’s clear that inflation is something to be aware of right now.
With all this inflation talk, how do you beat it when you're an employee?
Your income is only going up by maybe 3% per year. Obviously that's not enough to make up for inflation.
Even if we use the report’s (inaccurate) number of 6% inflation, your income only went up by 3%. Inflation went up by 6%.
In other words, if you earned $100,000, by the end of the year, that money was only worth $97,000. You lost about $3,000 due to inflation.
Inflation only occurs on this kind of level when the financial system is being managed by the government.
I'm going to give you a little bit of background about our financial system.
Once you understand how it works, you'll better understand how being a freelancer helps you to stay outside of that system so that you don't keep getting taken advantage of by a financial system that keeps getting worse and worse.
Understanding how it works will also help you know how to protect the money that you’re putting in effort to earn, and understand how to support your family regardless of your money continually losing value.
The United States operates on a Fiat financial system, meaning that the government determines the value of our currency.
We use the dollar as our currency and most of the world uses the dollar as their reserve currency. In the 1970’s, we went off what was called the “gold standard”, meaning that our dollar was no longer being backed by gold. At that point, inflation started to take off and the value of the dollar started to collapse.
Now, the government could just print money whenever they wanted.
When you have extra money being printed that isn't backed by anything and is being pumped into the economy through dollars being handed out to people and businesses, inflation occurs.
The reason it occurs is because you now have more dollars chasing the same amount of goods.
People have more money in their pockets, and prices rise because the value of that dollar is now less than it was before.
It comes back to supply and demand.
We've talked about this when it comes to freelancing: The price that you can set for your services comes back to supply and demand.
I really want to make sure you understand this and how this economy is affecting you right now, because this inflation thing will affect what you're charging as a freelancer.
You will need to increase your prices to also compensate for this inflation factor. You almost can't escape it because your cost of living is going up..
You need to be able to raise your prices to afford to live because the price of everything just keeps going up.
That's one piece of how you can beat inflation: Raising your prices.
But that's only one small piece, and we are going to talk about how this really works on a bigger scale in a minute.
First, I wanted to make sure that you fully understood what kind of financial system we're in, because then you’ll realize just how beneficial it is to be a freelancer right now, especially going into 2022.
With our financial system being a Fiat system, again, the government can print money whenever they want. Obviously, as we've seen in the last year, there's trillions of dollars that keep getting printed and pumped out to the economy.
The government keeps trying to step in to save the economy and to save people's lives through printing more money.
When they do that, they make things worse.
Everyone thinks that the government is “saving” them by giving them more money.
Then a few months later, the truth reveals itself of what happens when the government prints a ton of money.
Interest rates start to go up. We end up dealing with the consequences of the government printing money through inflation and increased prices. .
The free money that we thought we got, we didn't really get.
First of all, it was partially tax money, which comes from us, since the government's revenue comes from us. Our tax money is their revenue.
Secondly, because of inflation, that money now isn't worth what we thought it was. All of our money is losing value.
If your money is losing value, then it’s not so much of a gift after all, is it?
On top of that, all that money is getting pulled back in. It's getting taken back away from us through inflation, through increased interest rates, and through higher taxes.
With freelancing:
You can lower your tax burden because you have a lot more write-offs. You can have a lot more things that you can deduct like your home expenses, your personal expenses, utility bills, and various things that you couldn't deduct as an employee.
As a freelancer, you can figure out how to increase your income much higher than 3% per year. On average, since I started freelancing, I've been increasing my income by 40% per year.
Through Freelancing, I've been able to more than make up for the rate of inflation.
It's allowed me to continue to further my family's life, our lifestyle, and our financial life.
Additionally, when I earn that money, I don't just keep all that money, a savings account. I invest it in things that have more value.
It doesn't do any good to just stash a bunch of cash in my bank account because those dollars are losing value every single day.
I invest in things like crypto currency, and other assets that are increasing in value so that my money isn't just wrapped up in a bunch of dollars in a bank account, losing value.
Instead, it's wrapped up in assets that are increasing in value such as real estate, precious metals, and cryptocurrency, which are all increasing in value overall.
Let’s go back to the freelancing piece, and how you're able to increase your income by 30 or 40 plus percent per year.
As you're building a business and providing a service, you can scale that service to the point where you're getting a couple hundred dollars per hour when your expertise is developed.
Most freelancers tend to be specialists.
When you're a specialist, you get paid more.
Companies are willing to pay you to be an expert on something that only a few people are an expert on.
The more you specialize, the fewer people there are that do that thing.
That’s one aspect of how you can get paid more as a freelancer. Another aspect is your pricing model. You're able to charge flat rates for things that can increase your hourly rate.
For example, even if you have a $150 hourly rate you can still produce a video for a client and charge $500 for it, even if it only takes you 2 hours to do that work.
The client was willing to pay $500 because of what that video would do for their business.
You just made $250 an hour for the 2 hours you worked, but the client is satisfied, they feel like the video is worth $500 because you're an expert at what you're doing, which is why it only took 2 hours.
If they had tried to produce that video, it might have taken them 15 hours, 20 hours.
A good metaphor is a locksmith. You might pay a locksmith $150 to come and unlock something.
He shows up, and he does the job in five minutes.
And you're like, “Wow, $150 for five minutes, plus ten minutes driving to my house!”
Let's say it took him 20 minutes total to drive to your house, drive back, and unlock the thing.
However, he has spent years and years developing his skill to be able to do that in five minutes. Whereas you'd be sitting there for hours trying to get it unlocked. So it's worth $150.
That's how you have to start thinking as a freelancer: it doesn't matter how much time you take, it matters how much value you bring.
Now, it will take hours and hours and hours to get better and be better at that skill.
But once you really own that skill and you're really efficient at it, you can charge a substantial amount of money.
Of course, you can't charge more than somebody's willing to pay, and you're going to be honest and ethical about your pricing and your services.
But if the service you're providing for another business is helping their business to grow then it’s worth it for them.
If they spend $500 on a video, they get $2,000 back in sales as a result of that video, is it worth the $500 to them? Absolutely.
If you're always thinking about how you can get a return on their investment, then they are going to be willing to pay you what will seem like a lot of money to you.
You might be getting paid $250 or $300 an hour.
But they don't feel that they're getting taken advantage of or ripped off because the product they're getting in the form of your service is adding value to their business that exceeds what they're investing.
You are an investment to them. That's how you have to start thinking about things.
In other blogs, I go into more details of how to price out your services specifically and how to figure out what rates to charge.
But in this blog, I just wanted to give you an overview of how, as a freelancer, you're able to beat inflation through:
Lowering your tax burden.
Owning a business that allows you to specialize and set your own price model.
Becoming an expert in something so that you can get paid a substantial amount of money per hour, that you wouldn't be able to get paid as an employee.
As an employee, they're figuring out a salary for you, and they're putting a cap on that based on whatever the market rate is.
Because of that, you might be lucky to exceed $100/ hour. Most people struggle to exceed $50 an hour as an employee.
Another way that the employee system really limits you is that as an employee, your employer is trying to have you do as much as possible.
They're paying you for 40 hours a week, which has become the weird standard. Many times, employees end up doing multiple jobs in order to fill that 40 hours, and they end up as generalists, even though the have a specific job description.
With freelancing on the other hand, you can become a specialist, and expert in one thing.
Because of that, you can earn more and businesses are willing to pay for it.
More businesses than ever before are willing to hire freelancers because they know the expertise that freelancers can bring to their team.
So to wrap it up, as you're looking at the prices of everything increasing, start considering freelancing.
It brings me comfort knowing that regardless of how much the prices of things keep going up, regardless of how much the government keeps tampering with our money and our financial system and all the money we're earning keeps losing value dramatically, that I have control over my income.
I mean, have you ever talked to your grandparents? And they're like, “Man, I bought my house for $17,000”.
If anyone's been paying attention over the last year and a half, the housing market has just absolutely exploded. In my area, houses that were worth in the upper four hundreds a year ago are now worth in the upper six hundreds.
It's insane. It's making it so difficult for people to get into a house and own property that allows them to really start to build wealth.
If anyone is feeling like they don’t know how they’re going to compensate for all this insane inflation and the cost of living constantly rising, freelancing is your answer.
If you're already freelancing and you're trying to figure it out, be sure to subscribe to my YouTube channel.
I give you a lot of tips on how to build your business from home, especially when you're a parent, and you're trying to manage raising a family. There's a lot of pressure involved in being able to provide for your family, despite the crazy economy, and despite the way in which our financial system is broken.
The value of our currency is not based just on supply and demand, it's just it's wacky. It goes all over the place and overall, it just keeps losing value. What you can buy with a dollar today is not what you'll be able to buy with a dollar a year from now.
So start making up the difference by starting a business at home, by freelancing at home.
Starting an online business is very, very low cost. All you need is the internet and a computer to get one going.
It's a very, very low investment thing to be doing, and it can allow you the freedom to have more time with your family.
I don't even have to work 40 hours a week. I work around 25 on average. So I'm able to earn full-time income, and go way beyond beating inflation, and provide for my family by working what the rest of the world considers to be part time hours.
So I encourage you to explore it, and let me know if you have any questions.
Know that there is a way of this financial system that is taking advantage of you and concentrating all the money on an elite few people.
The more you look into it, the more you'll realize that you are simply a pawn in this system and you are a slave to it. The more that you are a part of the system, and the more you're a slave to it, the harder it will be to get ahead.
Being an employee, you do lose some of those freedoms. You cannot escape the system as an employee in the way that you can as a freelancer. So with that said, let me know if you have questions and check out the rest of the site if you want more info and resources to start freelancing, especially as a parent. Until next time.