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This lesson is called how to master freelance finances, and it will show you how to manage your bankroll

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so you are in control of your money and not the other way around.

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In this lesson, we will be covering why forming an LLC has huge benefits.

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Money strategies that the rich use.

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How to invest your savings and how to avoid shiny object syndrome.

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The reason this lesson is important is because most people burn their money when they get money, they

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spend it if they start making more money every month.

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They find a way to spend that on something.

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The truth is, most people do not know how to save money and how to multiply it into more.

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Instead, they get stuck, spending it on liabilities and depreciating assets that only fuel an ego

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driven facade in order to be a truly profitable freelancer and to build a real, sustainable business.

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You must have your finances and bankroll in order.

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And this lesson will teach you just that.

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First, I'd like to discuss what an LLC is now before I start, I do want to let you know this is just

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my experience and should not be considered legal tax advice.

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Please consult a tax professional to discuss your specific situation.

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So an LLC stands for a limited liability company.

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And basically what you're doing is you're forming your own legal business in the state that you live

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in.

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So instead of being a sole proprietor, you will be a business in the state that you live.

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Limited liability companies provide huge tax and liability benefits.

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There are a lot of different reasons in each of these two categories why it makes sense to file an LLC

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instead of just remaining a sole proprietor on the tax side of things.

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When you form an LLC, you can harness the power of deductions, so a deduction is what helps you lower

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how much your taxable income is, which in turn helps you pay less on your taxes.

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There are many different expenses that qualify for a tax deduction, such as your Home Office, a percent

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of your internet bill, how many miles were driven because of your business and even training materials

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like this course?

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If you have an LLC, you can write off all of these as business expenses.

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That means when you make money, you get to deduct everything you spent on those business expenses.

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So you get to pay less tax.

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So you should be writing off everything that I just mentioned.

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If you want to take advantage of being an LLC and as a freelancer, it makes sense to do this for so

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many different reasons.

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If you haven't done it yet, I suggest you do it and you can even write off the cost of this course.

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So to do that, I like to use QuickBooks, and what you can do is go to the profitable tools and apps

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and find a link to that there.

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And with QuickBooks Lets Me Do is keep track of all of that accounting and all of those tax deductions

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and all of the income.

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That makes it super easy to just hand that off to an accountant and for them to prepare your taxes.

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When you start to learn all of the different ways an LLC can benefit you on the tax side of things.

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You'll realize that businesses that are losses have a huge advantage due to those deductions, whereas

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individuals do not get to take advantage of those certain tax benefits.

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Next, you also get to take advantage of a new pass through deduction, which is what you are as a single

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member LLC, you serve as a pass through entity where the money flows through the LLC into your personal

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income, which is a 20 percent pass through deduction that they filed with this new tax law.

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So you get to take off 20 percent of that pass through income, which previously you had to pay for.

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So this helps you offset your other taxes like self-employment tax and other ones.

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It gets pretty complex.

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So I do suggest that you get a good accountant, but just understand that when you form an LLC, you're

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getting multiple different types of tax benefits.

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On the liability side of things, when you file an LLC, you're protecting your personal assets.

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And that is one of the other biggest reasons an LLC is recommended for any freelancer.

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As always, this is, for example, purposes.

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So I suggest you speak with a lawyer or an account for further questions.

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But my suggestion is to make sure that you set up your LLC.

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It will help protect you, and if anything happens to go wrong, you will be happy you did.

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For example, if you don't have an LLC establish and there's some sort of lawsuit with a client, your

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personal assets may be at risk, a.k.a. your house in your car and anything you have.

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That's valuable.

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But when you are operating through an LLC, your personal assets are protected in only the business's

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assets would be at risk.

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This is a very important thing to understand, especially as you start to work with more high Typekit

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clients and the projects get larger in scale.

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Remember, it's not what you make, it's what you keep that matters.

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The moral of the story is if you are going to make money, it's not how much you make that matters,

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it's what you get to keep after those taxes.

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And the truth is, taxes will be one of your largest expenses, if not the largest expense you'll ever

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pay in your entire life.

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So doesn't it make sense to lower your liability and keep more money in your pockets?

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That's why you should go and look into ways an LLC can benefit you in your specific situation.

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Now, let's talk about how the wealthy manage their wealth so you can model after them.

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The trick is to stay broke, and you might be asking What does that even mean to stay broke?

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It means you need to keep sacred savings accounts that you transfer any money you make into after you

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take care of all of your bills.

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You never should be keeping more money than you need in your checking account because money will find

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a place to get spent if you keep it in your checking account.

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You will find a way to swipe your credit card or to order something online or something will come up

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where you need to use that.

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However, if that money is in your sacred saving account and you don't touch that at all, it is much

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safer there.

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And then you can invest that down the line.

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So this is what it looks like when you open up an LLC.

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You can now open up a business checking account and saving account with your new company.

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This should only be used for your business expenses and for your freelancing income.

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This is the account you will enter into Upwork once you have it.

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When the money comes in, it first comes through that business checking account first.

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From there, you need to pay yourself first to handle your monthly expenses and all of your living expenses.

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That's exactly what you should do.

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The money should go directly into your business checking and then into your personal checking based

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on how much you need for your budget.

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Then this is the secret.

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This is how you stay broke.

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Once you've transferred the money you need into your personal account.

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You need to get that money out of your checking account for your business and into your business saving

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account.

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So make this type of account the one that is so sacred that once you put the money in, there is a promise

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to yourself that you make that you will not spend it no matter what, even if something comes up in

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life where you need that money instead of taking it out of that account.

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You need to go out there and create more money in the marketplace with your freelance skills.

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You're not allowed to take that out of that savings account.

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This is how the wealthy stay broke, and they ensure that they don't spend more money than they need

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to.

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This is where investments come in down the line because your business saving account will now be able

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to sustainably grow.

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However, if that money was just sitting in your checking account, chances are it would slowly be getting

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depleted.

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Now, once you are at a place where you'd like to pay yourself a nice bonus, you can take a vacation

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with it by a family member, a gift, buy some new clothes, whatever it is, but it is important to

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take bonuses once you've earned them.

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But remember, with this bonus, you need to also invest into your personal savings with anything that's

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left over.

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Remember, always broke.

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So always keep any actual money you have in your savings account and you don't touch it until you're

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ready to invest.

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Because when money gets bored, it will get spent on something.

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I guarantee you'll find a way to spend it.

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So if you have some money and you transfer it over as a bonus into your personal checking to buy some

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things or to go on a vacation once you're done with that, any excess needs to go now to your personal

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savings.

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So use this mentality of transferring your money into a sacred account, and it will help you stay more

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accountable and accumulate more wealth.

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Now, with that wealth, the next step is to start making some smart investments with it.

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Now that you know how to stay broke.

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You need to think about what you're going to do once that money gets to a point that you're ready to

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invest it.

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The first step is to keep your lifestyle the same.

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There's this statistic that says 76 percent of all Americans live paycheck to paycheck.

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And that's in the wealthiest country in the world.

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You need to understand that even though you're freelance, income might start to increase as you implement

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all of these things, you're learning.

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It doesn't mean you need to go out there and start to increase the level of your lifestyle.

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I see this very often where as soon as someone starts getting some more money and they go out there

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and they buy expensive cars, they get high end apartments, they're eating out all the time, they're

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buying a bunch of shoes and clothes, but they don't remember that if they want to stay wealthy, that

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they need to be disciplined.

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And you might be seeing them on Instagram or just seeing like they're always going out and having fun.

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But sooner or later, that's going to catch up with them.

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You need to have discipline here, and that means keeping your lifestyle the same even as you start

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rising through the ranks and your monthly income starts to skyrocket.

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Next, don't spend invest.

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So you may be asking, well, what do I invest my money on?

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Well, the thing is, I suggest that you invest into yourself.

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An investment is anything that will pay off for you in the future.

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This can be both monetary and non-monetary.

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So just like this course, and just like this is an investment you made in yourself to learn more and

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increase your earning potential.

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Continue investing in yourself because that's the only thing you can truly count on in trust.

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And do not invest in things that you don't understand.

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If you don't know how they work, do not get distracted by them because ultimately they're going to

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distract your focus.

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And it can even cost you some of that hard earned money that you work so hard to save.

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So focus on the things that you know, such as becoming a freelancing master, invest in your skill

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set and continue to become more of an expert so you can keep charging higher rates.

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Next, continue investing into expanding your skills, whether that means taking more courses, getting

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advanced certifications, learning additional skills that complement your existing ones.

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Whatever it is, continue expanding at all costs.

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Focus on getting extremely good and solving more and more problems and bigger problems.

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The more you do that, the more the money will continue to flow.

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And lastly, invest into upgrading your hardware, so your hardware is anything that you're using to

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actually conduct your freelance work on investing into upgrading, my personal setup was my first big

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business expense that I ever invested in.

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I had finally saved up a few thousand from my first client, and I decided to go all in on myself.

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I put all my chips into the middle of the poker table and I said, all in, let's do this and this is

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what I did.

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I went from working on a crack laptop on my kitchen table while my roommate was blasting music in the

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living room, which you can see in this Instagram photo taken in 2016.

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To investing in a legit office setup up with a few thousand dollars that I had initially saved up that

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included the 27 inch iMac, I'm currently working on an additional external monitor to increase my productivity

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and an ergonomic keyboard, mouse pad and chair.

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This all helps me get more done in less time and more comfortably.

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So just having a quicker operating computer and more room to work on it enhance my efficiency and helped

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me immediately start earning more money.

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And I was also able to get more done in less time.

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So with whatever you're doing, always make sure you're investing in yourself first.

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You're the one that knows that investing in yourself is the best decision you can make.

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And now let's discuss the final part of this lesson.

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Something that is called the shiny object syndrome, just like in this example.

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So in this example, we have some dogs sitting at a very important meeting, and whoever is presenting

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the meeting says we need to stay focused on our marketing priorities and not get distracted by every

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shiny new look squirrel that is 80D had its finest.

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And the truth is, many freelancers and online entrepreneurs fall victim to this shiny object syndrome

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needs to be avoided at all costs.

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And basically, it's when you begin to lose focus because new things, a.k.a. shiny objects, start

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to pop up on your path and deter your focus.

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To be the most profitable freelancer you can.

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You need to accept the fact that these shiny objects will come up on your journey while you're focusing

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on Upwork and getting better at the skills you provide.

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I guarantee you there's going to be some new platform that pops up some new skill set that might interest

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you, but you need to stay focused on what your goal is.

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And don't get distracted with these new shiny objects that pop up.

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I made this mistake in the beginning of my journey.

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I was building my freelance business and my digital marketing agency.

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And instead of staying focused on that, I decided to try to start my own ecommerce store on the side.

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What happened was I ended up spending a lot of my time trying to build this e-commerce store when I

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really already had paying clients that wanted more of my help.

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I was spending my focus on something that looked like some new shiny object aka building this e-commerce

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store that I thought would blow up overnight.

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And in reality, it was just taking focus away from my real income stream.

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And a part of this is understanding that some opportunities will be missed along the way.

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But what matters is that you're able to remain focused and take massive actions towards your goals.

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By jumping around from shiny object to shiny object, your circle of focus will get demolished.

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But when you stay focused on that one skill you're providing and staying on that platform, you're on.

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That's when you will start to have more and more wins.

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Next, you need to protect your first flow of income with your life.

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If you're jumping around from shiny object or shiny object before you know it, your first flow of income

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will dry up because your attention and your energy is getting split into multiple different areas.

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And I've seen this happen before.

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I've even had previous clients that begin to expand into new industries that they had no experience

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in before they knew it.

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They spread themselves too thin in their first business began to suffer because of the lack of attention.

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You need to protect your first flow, which is freelance client income with your life.

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And that ties directly into the diversification myth.

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This is a largely misunderstood concept.

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But when you start to diversify your effort, your energy and your money into multiple areas that will

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actually hold you back.

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So when you make an investment, whether that's your time or whether that's your money, make sure you

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don't diversify it too much.

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You need to go all in on that one area in order to actually have a payoff.

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And there's a lot of different misconceptions around this because people think that if you put all your

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eggs in one basket and if that basket fails, then you have no more eggs.

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But as Andrew Carnegie said, take all your eggs and put them in one basket and watch that basket.

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Once you know that you were so dedicated that you were going to be there till the very end until you

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become successful, then you know that you were watching that basket and you were protecting all of

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the eggs within it.

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The only way you can fail is if you quit.

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And the true rich go all in on one or two big investments.

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Now, this is not to be confused with getting multiple flows of income because income is different than

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investments.

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I'm talking about investing your time into the main thing that is having an impact in your freelance

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business.

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And lastly, focus on the things that can't be destroyed to avoid that shiny object syndrome, you need

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to focus on your knowledge and your experience.

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Those are things that no one can take from you, even if you lost all of your money and everything you

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owned.

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You will still be left with your knowledge and experience that will always be worth your investment

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because it enabled you to get those earnings in the first place.

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And you can always get them again.

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So now you understand how to master your freelance finances so you can begin putting all of these things

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into practice for your freelance business.

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I look forward to seeing you in the next lesson.