One of the biggest misconceptions is that earning more will automatically make you wealthier.
It seems logical on the surface, but the reality is much different.
No matter how much you make, whether it’s six figures or more, financial success doesn’t come from income alone... it comes from how you manage your money.
The Myth of High Income = Wealth
There’s a belief that the more you earn, the better your financial situation will be.
This idea is misleading and often results in a bad outcome.
Let’s look at three real-life examples I know to highlight this point:
Person A: Retired with millions of dollars but spent it all within seven years. Today, this person borrows money just to eat.
Person B: Earns a big salary—over $20,000 per month—but is in debt and struggles to cover basic expenses.
Person C: Wealthier than Gary Vaynerchuk yet lives a humble life.
What’s the common factor between these people?
How they manage their money....
Financial Management Is Key
You can earn a fortune, but if you don’t manage your finances properly, it will slip through your fingers.
The most critical piece of financial advice is simple: manage your money, don’t let it manage you.
Many people struggle financially, not because they don’t have enough income, but because of how they handle it.
Poor financial decisions, often based on emotional or social pressures, can keep even high earners in a cycle of debt and stress.
By the way, Elisabeth hosted an amazing webinar on this topic if you'd like to watch it:
Smart Spending: The Freelancer’s Dilemma
For freelancers, income can be unpredictable, which makes financial management even more important.
To maintain stability, freelancers need to be smart about their spending, especially during dry spells.
You can’t afford to waste money on luxuries when you’re not consistently bringing in revenue.
A common issue is that people claim they can’t afford basic expenses, but when you look closer, they’re spending on unnecessary luxuries.
If you have credit card debt and are struggling, yet own the latest iPhone or dine out frequently, then your financial priorities need adjustment.
Stop Keeping Up With Peers
One of the biggest reasons people mismanage their money is the desire to keep up with others.
Whether it’s friends, family, or coworkers, the need to match their lifestyle often drives people into debt. This psychological pressure is more about insecurity than necessity.
If you’re serious about changing your financial habits, it’s time to cut out or downgrade unnecessary expenses.
For example:
• Swap cable for a cheaper Netflix subscription or even YouTube.
• Instead of dining out regularly, cook at home.
• Stop upgrading to the latest gadgets and branded shopping sprees.
You don’t have to cut these things out forever—just until your financial situation improves.
Practical Steps to Better Financial Management
Once you start earning a decent income, it’s crucial to have a clear plan for managing your money. Here are six actionable steps to get started:
1. Pay Your Bills First
It sounds obvious, but make sure your essential expenses are covered before anything else. These include:
• Rent/mortgage
• Food
• Medical expenses
• Car payments
• Utilities and internet
Don’t forget to account for any additional services you use for work, like hosting, email marketing tools, or productivity apps.
Pro Tip: Calculate your annual expenses (such as domain renewals, car fees, or accounting services) and divide them by 12. Add this to your monthly budget to avoid any surprises.
2. Save for Repairs and Upgrades
You’ll eventually need to replace or upgrade your tools, whether it’s your laptop, software, or other essential items for your work. Start saving now so you can afford these expenses without putting yourself in a financial struggle.
3. Invest in Education
Learning should never stop, especially if you want to stay competitive.
Whether you’re a developer, marketer, or designer, there’s always something new to learn. Set aside funds for courses, certifications, or books that can help you grow both personally and professionally.
4. Network and Build Relationships
Networking is critical to growing your business, and it often requires an investment of time and money.
Attend conferences, join social events, and meet other professionals in your industry.
Remember, your clients are businesses, not other developers. Focus on attending events that put you in contact with business owners.
5. Treat Yourself (Within Reason)
While it’s important to be frugal, don’t forget to reward yourself occasionally.
Take breaks, go on mini-vacations, and create memories with your family. Life shouldn’t be all work and no play.
But make sure you save for these trips in advance rather than funding them through debt.
6. Save for Rainy Days
Emergencies happen....
Whether it’s a medical issue or losing a big client, you need to have savings to get you through tough times. Aim to save as much as possible. Cash in the bank will always be a better safety net than an upgraded lifestyle.
Avoid the Pitfalls of Lifestyle Inflation
A common trap people fall into is increasing their spending as their income grows.
It’s tempting to upgrade your car, move into a bigger house, or buy expensive gadgets once you start making more money.
But these expenses add up, and without proper financial management, they can lead to the same struggles you had when you were earning less.
Refer back to the three examples earlier. Earning more doesn’t guarantee financial stability. It’s about managing what you have wisely.
Conclusion:
At the end of the day, the most important lesson is this: your income doesn’t determine your financial success—how you handle your money does.
Stop trying to keep up with others and focus on what’s truly important. All material things will eventually fade away, so prioritize your financial health and invest in experiences that truly matter.
Hope this helps!
-Kyle