Most self employed people are not that motivated by making mega money or being rich. Most of us are running businesses because we want control over our lives – we want to do our own thing, not have a boss, work the hours we want, do the work in the way we want to do it. Or we’re completely unemployable!
It’s a myth that the best way to be rich is to be self employed. In fact, the best way to be rich is to be born rich. We don’t get to choose that one, but we do get to choose whether we set up a business and run it by our own rules. But you do get to choose whether to make a decent amount of money from our business.
How much is enough money when you’re self employed?
I see clients all the time who say that they’re not that motivated by big money, they just want to earn enough. And then I ask them about how much is enough, and I’m always fascinated by the replies because they vary so much. For clients who don’t know, I have a rule of thumb that I want to make them earn at least 50k a year. And then I make them go away and work out what their target income really is.
50k isn’t rich. It might seem that way if you’ve been used to earning minimum wage, which is less than 14k a year for working full time. And of course if you live somewhere you can eat for £1 a day, and average earnings are £20 a week, it’s going to look like an enormous amount of money. But if you’re based in the UK, 50k seems to be around the figure you need to earn to be able to have some sort of financial security, and not worry about money.
It’s probably enough to buy a house or at least save for a deposit. Or be able to afford children, who apparently cost 220k each to feed, clothe, take on holiday and educate (you can amortise this cost over 18 years, by the way, it’s not a one off payment.) You probably need to be earning 50k to afford to pay into a pension, pay your mortgage and have a couple of decent holidays each year.
Everyone has different amounts they want to earn
Everyone’s different. Everyone has different calculations and different needs, in fact, my target for my own business isn’t 50k. And there’s no right or wrong way to work out what you need to earn. But even if you’re not bothered about being rich, have a good think about what you need to earn, maybe starting from thinking about that magic 50k number.
And then factor that into the targets for your business. Maybe you won’t be able to reach your target this year, but start putting in place the things you need to change about your business to get to your target. And if you’d like some help in getting to that target, whatever it is for you, come and have a chat about how we can work together to get you there.
Here are some ways I can help you and your business:
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