Building Your Financial Runway: How To Set Yourself Up For Success

In this episode, Laura Lynch reflects on her first year of self-employment and shares five money lessons she has learned. These lessons include finding what excites you, having a financial runway, knowing benchmarks, trusting yourself, and time blocking for work-life balance. She emphasises the importance of aligning work with personal values and creating a sustainable income while prioritising non-work activities. Laura encourages listeners to take these lessons to heart if they are considering leaving corporate and starting their own business.

For full show notes and more information visit: https://bit.ly/4eL8oOj

Go to www.altamericandream.com

Transcript

0:05

It takes a brave and independent mindset to go tiny. If you are trying to figure out your tiny pivot, this podcast is here to inspire and connect you with the other unconventional, gritty, inspirational people within this community. I am Laura Lynch, your tiny house friend and host. On this show, we are always going to come back to money because as a financial planner, this is the question I hear the most. How do I make this work for me financially? Well, that's my jam, so jump in, let's go. New episodes drop every Thursday. Thanks for joining me today on Less House, More Moolah Podcast. I'm Laura Lynch, your host. I wanted to take this episode to number one, celebrate the fact that on July the 5th, I will have been self -employed, founder, entrepreneur, whatever term you want to use, podcast host, business owner, all the things for one year. And so as it is my one year business anniversary, I was really thinking about some of the money lessons that I have learned from my first year of self-employment. And I thought we might explore those. I think that for many of us, tiny living is both a way for us to live out our personal values, which sometimes in the American dream life come in conflict. with that need to constantly be productive, that culture around productivity, accomplishment. And so we view tiny living as a way to get deeper into what is more personally fulfilling to us, what is personally more important to us. And sometimes that means that work has to show up in the form of some sort of self -employment, whether that's gig work or full -on, you know, firm founder or, you know, sort of switching gears into part -time work that, you know, maybe has some, you know, self -employment elements. But in any case, very often people in tiny living kind of lean on that. self -employment piece in order to achieve what they're trying to achieve, which is a simpler life, more connected with their values. And so I wanted to share some of my lessons that I have learned in one year of going from many, many decades of being in the corporate world and sort of following the career path and, you know, at least trying to stay consistent in that world and compromising to be in that world and squashing my voice to be in that world. And now here I am on the other side, getting to be as authentic as I can possibly be in the space of working for oneself and still, you know, building up some income. And so I wanted to talk about what I've learned in this first year. So there's five things. I'm gonna talk about kind of having a long view in terms of what we think we can be excited about. We're gonna talk about a money runway. We're gonna talk about knowing benchmarks, talking about trusting ourself and also time blocking not working and how important that is. And really all of these are money lessons. but they are very much largely mental health lessons as well. So I'll talk about both the money and the mental health piece of this. So the first thing that I really noticed in the first year was the fact that I still wake up motivated to do this thing that I am doing, this self -employment journey that is part creative and part sort of traditional work. as well and so I notice more the things that I really love to wake up for and the things that maybe I can delegate or outsource that I don't get excited about waking up for. So I get very excited about new things. Exploration, of course, is one of my key values and so whenever I get to do something new or create some new idea, that really motivates me and excites me. It excites me to talk to new people. I love that on the podcast and in my business both. Anytime I can explore, this really excites me and I wake up day after day for that thing. And so having gotten, I would say bored easily in my past career, I think it's really important when we head off on into a self -employment journey that we understand our deepest values and therefore what we're gonna be excited to do every day. And of course, as I've shared many times on this podcast, I would say the two words that I would have tattooed on me and that I have been accused of being my two core values being independence and exploration. I really, I think intentionally put those into this business and that has allowed me to continue to wake up every day. excited for that in the first year and hopefully, of course, for the long term future. And so there are many ways that we can be entrepreneurial or self -employed in this world today. And so figuring out what we will wake up for every day, both make sure that we're going to be able to stick with it because we all know the statistics of business failure, right? But also to make sure that we are in increasing the quality of our life, right? Because that's the whole point of this and the entrepreneurial and self -employment journey, of course, is really challenging. And so in order to get the rewards of it, the rewards of having more control over our schedule, the rewards of being passionate about what we're doing, we have to truly pick something that we're going to be passionate about for the long term. rather than something that sounds super cool right now and maybe doesn't actually deeply align with us for the long term. So I would say that's like the top thing is to figure out what is gonna light you up for the long term. What can I wake up for in five years and still be excited about doing? So that's number one. Number two. is having a money runway. So what do I mean by runway? One runway, I can't even say it. So runway being that path to where you're going, where you've kind of built out some financial savings for yourself to create this thing that you wanna create without having to get so worked up about I need revenue, I need income right this second. because most businesses take a couple of years really to be profitable or to start paying the owner, founder, entrepreneur. Of course, that varies a lot by industry or by business type. If you go out and drive Uber, maybe that's something that you start making money immediately. But for many of us, Starting something on our own means we have to do a lot of business development in the beginning. And that is a lot of, you know, doing the activities and being committed to the activities and less worried about outcomes over time. And so in order to engage in those activities and be free from, you know, that sort of self -imposed stress, it is really good to make sure that we have a savings cushion for that. and that looks totally different based on what business you're trying to create. It also varies by your personal situation. Obviously having a large American Dream mortgage makes that more difficult because you've got a larger cost of living that you have to make sure you're taking care of. So calculating what your money runway looks like is something that you could do. by looking at your cost of living and estimating the cost of your business startup and sort of putting some extra cushion in there because things always cost more than what we think they're going to. But that money runway not only enables the business to take its necessary time to build up. but also it allows you to feel comfortable in those months where maybe you're doing all the things and nothing is really happening yet, or you haven't, you know, you're starting to get some success, but it still isn't enough to pay yourself. So that money runway and having enough of it where you have a number where you can sleep at night and enjoy your life and the process and the journey of building a your business or your gig work or what have you is really, really an important part of that. It isn't great to be starting a business on a shoestring and having no money to cover the bills because then you're really stressed out and you're very likely to go back to the path of least resistance, the path of corporate job or easy job that will pay the bills. So that money runway is just critical. And so I would say that is, you know, number two, very important. Number three is knowing what to expect or having some sort of benchmarks. There are so many different types of work that we can do these days in order to be self -employed and entrepreneur or, you know, gig work, as I said, lots of different ways that we can make money not belonging to a larger corporation. And so luckily there are a lot of ways that we can find out what to expect. There are coaches, of course, that focus on all kinds of different business niches and, you know, articles we can research about what to expect. How long does it take to for a podcast to gain traction? As an example, how long does it take for, in my case, a financial planning business to gain traction? How long does it take for you to gain traction in your marketing consulting? How long does it take for you to gain traction in the Zumba class that you are leading? How long does it take to gain traction doing coaching or building up a Fiverr business or whatever it is that you're thinking about doing, understanding the benchmarks of what to expect in the first few years? helps you build that money runway that we talked about a minute ago, and also helps let you off the hook a little bit in terms of, you know, kind of being down on yourself when it comes to the first year of not seeing a lot of success. So those expectations are really important. Otherwise, you might put higher expectations than what is actually feasible on yourself and That goes back to the mental health piece again. We want to be doing this self -employment journey to create more peace in our life, not less peace in our life. So having an expectation, knowing what benchmarks look like, knowing what to expect in the first few years is, I think, one of the most important lessons that I've learned. I have some great benchmarks that I look at and I know what to expect and I can use those benchmarks also to gauge how much success I want of that benchmark too. So that's really important. What are those trade -offs? How much work do I wanna do in order to achieve those benchmarks versus how much of being in the world and connecting with nature do I wanna do and how might that trade -off from revenue potential? Those are all important considerations that have evolved for me. They weren't something that I came out of the gate necessarily thinking about. So along that line, I wanna talk about this important concept of trusting ourselves. And so sometimes I talk to people who are kind of on the edge of this transition, thinking about what it might be to make a career change. And especially when it comes from working in a world where you always have a boss and a dashboard or expectations. that someone else is giving you, to make that transition to your own expectations for yourself can be scary because you don't know exactly whether you're going to wake up every day committed to working on something that you know you have to wake up for and keep at for a number of years in order to achieve success. And so this goes back to self -confidence, self -efficacy, believing you can do something because you have past experience doing it. So if you can look back on your life and think about things that you have taken on that were long -term things, like a degree, for an example, and thinking about how you kept yourself motivated, if you can look back on your life history and think about how you have disciplined yourself or how you have kept yourself on track or how you have kept yourself motivated. The important piece of this that I wanted to share is that sometimes we have this worst case scenario idea that if we leave our job and we start up our own business or what have you, that we're gonna wake up the next day and become a slacker, as an example. And I think that for those of us who have a proven track record of attempting and accomplishing goals and things that were important to us, I think it's important to acknowledge that we're unlikely to change all of a sudden just because we go from having a corporate boss to having our own self as an employer or boss or accountability partner or what have you. And there are lots of ways of course that we can add in. accountability partners or networking groups or masterminds or all kinds of other things to help keep us motivated in a community of other people that are doing the same thing. But when it comes to just one -on -one, me and me, me and me, how, you know, I don't think that we're likely to wake up and just suddenly become an un. disciplined or an unmotivated person if we've been that in the past. And so trusting ourselves to stay consistent with ourselves is something that has been really important to me because of course you don't always feel as excited or motivated. And some days you're more excited to work on the projects that you've been listing off in your head. And other days you'd, you know, you'd rather go for a hike or, you know, take some time off or my gosh, stay in bed all day, there's something that I keep thinking that I should do and never get around to. But when I have those moments where my mood is lower, my motivation is a little bit lower, I just remind myself, like, the person you were yesterday is the person that you're gonna be tomorrow. So don't get so worried that you're gonna, you know, suddenly change course and not be motivated to continue to take care of your family and have enough income to pay your bills and save for your future. Like you've always been that way. So just trust yourself that you're gonna continue to be that way. So trusting oneself is number four. Now, of course, there are people out there where self -employment isn't a good idea and they thrive off of that motivation and accountability that they have from having a boss. And if that's the case, then for sure, just stay with what is best for you. But for folks out there that are really... considering jumping over that ledge of self -employment and you're unsure about your own motivation to continue to wake up every day. I'd say just look at your track record. Have you been a motivated and disciplined person in the past? Have you made sure that all of your tasks in the other parts of your life were taken care of? Well, then you'll probably just continue to be the same person. So just feel some trust in yourself. And let's ask more Mola, we hear so many stories of people living unconventional lives. Each of them is literally building their all -American dream. Are you tired of putting your dreams on hold because of money? Well, let's fix it. I have a two -part offering that is here to help you. First, I'm going to give you access to my financial freedom calculator so that you'll understand your numbers and have a tangible starting point. This is free. And then second, we'll book a session to figure out your finances so that you can live your alt -American dream as soon as possible. This is paid. Why am I giving you something for free? Because I'm passionate about empowering people to choose an unconventional path. So let's work together to figure out money so that you will know that you've officially taken action on your plans. This offering is for you if you're unsure of your cost of living or how much savings you might need. You don't know what money move to make next. You dream of an unconventional life built on your terms. You're seeking a permanent solution and not a one -time motivational boost. You want to learn about money from someone who shares your interest and breaking away from the norm. So what do you think? Are you tired of starting sentences with someday when I? Then go to all American dream .com and get the financial freedom calculator. And the fifth thing that I want to point out is the importance of time blocking not working. Many of us were raised with a lot of work ethic and a lot of sense that we have to work in order to be worthy perhaps or work to have value. And so we have to perhaps re - relationship with recreating, our relationship with resting. And one way to make sure that we're including those very important things is to time block them. So just like we talk about time blocking work tasks, you can time block not working. And when you time block not working, yourself permission. You're listing it as a task. Something that's important to do is to not work. You did choose this tiny life journey. You did choose self -employment to create more time in your life for the other things that are really important, but it is very easy when you are creating your own company, business, gig work, what have you. It is very easy to work. all the time because there is never ending algorithms to figure out and never ending administrivia to do. And so it's very easy just to work all the time. And if you are doing your own thing, you're probably working in your head all the time. So therefore you have to kind of carve out and be intentional about not working and about doing those things that were important to you to begin with. And so my Google calendar looks like a kaleidoscope of color train wreck, but a big part of that is time blocking for what I call love Laura, which is my time to, you know, do yoga, to spend time with my dogs, to socialize, build community. all those things that are really important aside from sitting in front of the screen and doing all the many, many tasks that I have on my Google task list. So that is another really important lesson that I have learned is to time blocking, the not working and holding yourself to that as well because that is the embodiment of the lifestyle that you wanna create when you take control of your calendar. So these are the five sort of money lessons that I have learned from self-employment. All of them go to the points of having some money savings in the beginning, being successful because you know what you're gonna wake up for every day, knowing what to expect from a revenue perspective over time so that you don't get too hard on yourself or get too concerned. or sort of backtrack to a salary because you think it's not gonna work out for you. Also trusting yourself that those activities are gonna continue because you've always been a goal achieving person and then making space in your life to not do revenue generating activities or not do business development activities because the whole point of this is to create more balance and to create an income that you can live off of and that you can save for your future, but maybe not necessarily the point isn't to build up a huge revenue or income that you don't even need. Maybe the point is to trade that off for the other things that you need, like time with yourself or time with your family or time with nature, time with your dogs. At the end of the day, when we work, we're all just trading our time for money. And so figuring out how much of that time we're going to keep for ourselves and for the other things that are important to us that we, that the money isn't worth it for. What is it that you would give the money away in order to have, you know, that time for it is important to figure out what that balance looks like for you. And much work you really wanna do and stay on that schedule and create that time for other things. So these are my five lessons, money lessons that I have from year one. I am excited to have gotten through the first year of being an entrepreneur. I'm pretty sure someone probably says that the first year is the hardest. It definitely has been a big, a bunch of learning for me and definitely all kinds of things that I didn't know that I would have to figure out that I've had to figure out. And luckily I've had a lot of great help along the way and support and in my networks and groups that I belong to. And so it's been great to be on this journey and I'm still excited to continue on this journey and see where year two goes. And so I would encourage you to kind of take these lessons if you're thinking about leaving corporate and starting something for yourself, take these five lessons to heart if they resonate with you and try to create a good foundation for yourself where you have some realistic expectations and some good time blocking and some good savings to get started. Thank you all so much and we'll be back next week with another interview and make sure that you let me know if this is something that was valuable to you. Hey, thank you for taking the time to listen to Less House More Moolah. I have another free resource on my website for you, the Unconventional Values Quiz. In just two minutes, you can pinpoint your style of freedom seeker, security guardian, adventure enthusiast, or community builder. Check it out at thetinyhouseadvisor .com. And one more thing, podcasts don't have algorithms like social media does. They only grow by word of mouth and reviews. If this podcast is helpful to you, would you please post a review on your podcast app and tell a friend who is trying to live a values -based life? It would totally make my day.