How To Protect Your Freelancing Money After You Earn It
Earning money as a freelancer is one thing, but how do you protect it once you have it?
Can your money multiply by just sitting there? What else should you be doing to help your income grow?
This isn’t going to be about withdrawing your money in cash and buying a good safe.
Storing your income in your bank account checking savings isn’t the best way to protect your hard earned money because inflation is stealing away the value of that money every day.
Instead, we’re going to talk about practical ways you can protect your money from inflation and earn a good return on your money through investments.
The government and media may be telling you that the Fed has it under control and that they have tools to manipulate the value of the dollar so that it goes back up.
The rate of the dollar may even start to go back up a little this next year as they hike interest rates.
But overall, in the long-run, the dollar is on a death spiral and has been for decades so don’t be fooled by their tricks to make you think that the dollar is back!
Fiat money, (the value is controlled by the government) dies in every country that has ever tried it. The government won’t stop printing money so they won’t stop devaluing it.
Your $5,000 that you deposited in your bank account from your freelance business will be worth $4,000 and some change next year.
In a previous post, we talked about how freelancing can help you beat inflation by simply raising your income far beyond the norm. But you also need to store your money where it won’t lose value.
Here are 5 ways you can do that:
Your bank savings account
Cryptocurrency
Precious metals
Stocks
Real Estate
My top choice is cryptocurrency, second is real estate, third stocks, fourth precious metals and fifth is a bank account. You should keep money in all of these, including your bank account. I’m not saying to dump your bank account.
When you’re just getting started as a freelancer and your income doesn’t leave a ton of wiggle room, the best thing you can invest in is cryptocurrency because you can enter with a very low amount.
You could buy $5 worth of bitcoin if you wanted.
Real estate requires much more money up front and is a better choice down the road, and stocks require more in depth education. Previous metals usually require at least a few hundred, but I’ll explain the role of each of these.
You don’t need to have a ton of extra income each month to start storing your money in these places.
The first place to store your money is in your normal bank account. I use a local credit union which I believe is the best place to bank because it’s more out of reach from the federal government and big bank policies and they’re more willing to treat you as a member instead of a customer.
Right now I store the majority of my income in my normal bank account, around 60% or so. My emergency savings is in my normal bank account because that’s the easiest to access.
Your investments may or may not be something you can liquidate or convert back into dollars so don’t rely on other investments for emergency savings. And of course all the money that goes towards paying bills and other expenses are in my normal bank account.
One day, I’ll likely have some of that in bitcoin as more companies start to accept bitcoin.
So while we’re on the topic, let’s discuss cryptocurrency.
Cryptocurrency is my favorite investment right now because it’s easy to get into, it appreciates massively and is the future of finance.
Crypto isn’t just a currency, it’s a technology. It’s the next version of the internet.
That’s very exciting to me along with the fact that it’s decentralized so it’s not controlled by any government, just supply and demand.
China has banned crypto several times already which means nobody can actually ban it. Governments that like controlling the money of the people don’t like crypto because it means more money in the people’s pockets and less in their pockets.
We don’t benefit from fiat currency or government controlled currency, they do.
Cryptocurrency is still in its infancy even though it was invented 13 years ago. It’s adoption is where the internet was in the late 90’s so it’s definitely not too late to start investing in it.
It will take some education first to learn how it works, understand historical market data, and figure out how to buy it and sell it so that you make smart decisions. It is more volatile but only in the short-term, if you’re planning to hold it for a year or more you will definitely make a profit.
Bitcoin went up 90% over the last year, and within the year it had 200% gains in single months.
Overall though, cryptocurrency will protect your money from inflation and it is starting to gain widespread adoption. It’s never going away unless there’s a total global internet and computer collapse in which case everything is apocalyptic at that point so it doesn’t matter.
Cryptocurrency is run by a network of many computers around the world, people who mine the coins digitally and manage the nodes in the network, just like the internet. I won’t get into the weeds in this video and I’m not a top crypto expert, I’m just an investor in it and have only been in it myself for the last 6 months although I’ve been learning about it for a year and half.
I was slow to take it up because I was skeptical.
But then I began to understand why it’s such an important technology and why it really is the future of finance.
The current financial system is too corrupted by the government and it’s too slow. It takes several days to send money from one person’s bank account to another because of the middle man. Bitcoin can be sent in minutes from one wallet to another.
So I recommend that you learn about it. There are many crypto youtube channels out there.
Some that I recommend are channels I actually helped grow through my business:
Bitboy crypto, crypto jebb, MM Crypto, and many more.
The more educated you get the smarter moves you’ll make regarding when to buy and sell in order to make a profit.
Don’t see crypto as a way to replace your income, see it as a store of value.
You have your business to generate income and crypto helps to multiply that income and combat inflation. You should never invest what you’re not willing to lose, but in reality you only lose it if you sell after its lost value.
If it loses value below what you bought it for, just hold onto it and it’ll come back up, don’t sell until you’ve made a profit.
It’s also important that you don’t look at it as a get rich quick strategy. Those who win with investing are patient. Also there are lots of different crypto coins you can buy, I’m just sticking with the main ones for now like Bitcoin and Ethereum because they are more sure to survive.
This post isn’t meant to teach you what you need to know to get started in crypto, just to give you some ideas about how to protect your money, so go to those other YouTube channels to learn more about it before you start investing in it.
The main way that I use Crypto is as an investment.
When I have extra income each month from my business, I put some in my savings account to go towards financial goals, some towards paying down debts like car loans, and some in crypto that also will go towards financial goals.
The difference is that the Crypto is locked up there until it makes sense to sell. Unlike your bank account, crypto isn’t something you can always convert back into dollars immediately.
Technically you can sell it immediately, but if the value of the bitcoin hasn’t increased enough or it decreased, then it wouldn’t be smart to sell it back into dollars. So don’t count on being able to pull it out whenever you want. It’s the same with all the other investments like real estate, stocks, metals.
With each of these investments, I’m just sharing what I’ve done or will do, I’m not an expert in each of these areas and I encourage you to seek ones out to learn from.
Precious metals are another good way to protect your money. I’ve only personally bought gold, but you can also buy others like silver and platinum.
For gold, you can buy a whole ounce or more. The more you get the cheaper it is. You can also get fractional gold at like $200 or even $60. It’s just that it’s more cost effective to buy larger amounts.
Historically, gold has proven its worth throughout human history as always being a fallback for currency and a store of value that has compensated for inflation. Gold doesn’t increase in value quickly like crypto and real estate or stocks can, but it does increase in value in the long-run and most investors suggest having 10% of your portfolio in precious metals.
Of course, everyone is going to approach it differently, and you’ll need to figure out what makes sense for your personal situation.
By the way, Bitcoin is often referred to as digital gold.
I see gold as something I definitely wouldn’t sell anytime soon, and maybe never sell.
It’s something you have as catastrophic insurance. If the financial system totally collapses and people revert back into trading and using gold and silver to buy things it’ll be good to have some of it.
Stocks are something I have not gotten into yet. I’d rather put most of my extra money into cryptocurrency for now. But I think stocks are cool in that you’re investing and owning part of a company that you want to see grow.
It’s risky if the business dies, but it can provide a lot of gains years later. Another strategy is to just invest in a mutual fund, have someone else manage it and that way you’re not really getting too involved in hand picking companies.
Stocks require additional education. The basics of how the charts work, and when to buy and sell is very similar to crypto but it’s still a different asset so I need more education on it before I invest in stocks. It’s on my list, but I’m not there yet.
The key is to diversify your portfolio of investments.
Just like I talk about a lot here on this blog about how freelancing allows you to diversify your employment so you’re unlikely to lose all your income at once, you also want to diversify how you store your money so it gains in value over time rather than lose value.
Real estate is something I have not gotten into yet because it requires a bigger entrance.
You need a lot more money to put down, especially if it’s a rental property. If you’re flipping real estate it requires a lot of time and education and it basically becomes a part-time job.
I can see myself getting into investing in rental properties down the road because real estate is very stable. People always need a place to live and more and more people every year are renting.
Investing in rental properties also provides you monthly income, which other investments don’t provide.
You’re basically buying a property, taking on the mortgage, and then someone else pays that monthly payment plus a bit extra so you get the extra as income.
You also get the equity in the property and the appreciation from that property so it’s a good investment long-term and I’ll get into it at some point. I suggest checking out Jason Hartman as an expert on this topic. I helped build his YouTube channel and he is the guy when it comes to rental property investing.
One of the things that’s currently starting to become more popular is fractional real estate investing. That allows you to buy small shares in a property rather than the whole property.
I haven’t looked too much into that yet, but it is starting to merge with the crypto world where things are tokenized. Look it up if you’re interested.
Mark Moss is another investor I recommend looking up on YouTube for general investing advice. He has a lot of informative and very well taught videos about investing, crypto, real estate, metals, all of it.
One last thing I invest in, but didn’t mention yet, is whole life insurance. I have a term life insurance policy for my family which expires in 20 years.
I also have whole life insurance which never expires and you get cash value for the money you put in. It appreciates by 3-6% per year, and once you’re 10 years into it you can withdraw all the money you put into it.
It’s like having a high yield savings account with the additional benefit of life insurance. Yes, you’ll lose some of your death benefit if you withdraw the cash, but it’s tax free and you can refund it if you want.
It’s worth looking into and can cost anywhere from $100-$500/month depending on how much you want to put in. The more you put in the more your benefit is. It’s definitely a long term investment though.
So those are a few of the ways that I protect my money (or will down the road) and are all worth looking into because it’s one thing to earn money, but you must also know how to protect it so the value increases.