Advice for New Consultants: Stop Spending and Reduce Your Living Expenses
I’ve decided to stay in Charlottesville, Virginia for the summer. It was a beautiful place to spend the spring and it’s been a great “home base” for my work. I’ve learned that it definitely helps a lot to stay put in one place when conference organizers are trying to book your travel arrangements! It makes planning so much easier when I know what airport I’m going to be flying out of.
Thanks to Craigslist, I found a fabulous cheap sublet with all of my “must-haves” and more … for just $425 a month! It’s a large room in an apartment with its own bathroom (pictured above), twin bed, dresser, desk and nightstand. There’s also a full kitchen, free internet and cable, plus a gym and pool on site. It almost feels like I’m living in a hotel room – except that I still have to clean up after myself LOL. I am subletting from a UVA student who went to DC for a summer internship. So it’s her lease, and I’m just staying here temporarily. I paid her for the entire three months up front, $1,275 in one check, which made it easier for both of us. She gets all of her money without worrying about me being a deadbeat subletter, and I get to have peace of mind knowing that my bill is already paid.
This place is by far the best, yet least expensive housing I’ve had since I gave up my apartment in August 2011. One month’s rent in DC is buying me THREE months rent here in Charlottesville. It’s reduced my living expenses dramatically for the next three months, and will also help free up some money for my trip to ITALY this summer! Yes, I’m going to be visiting my #1 dream travel destination for at least two weeks very soon. But more about that later :)
I keep thinking that I should have done this a long time ago.
I was reminded of this regret a few weeks ago at a networking reception in DC. I was talking to a guy who just quit his job to work for himself and asked me what tips I would give him as a new consultant. I told him to reduce his expenses ASAP.* The higher your expenses, the bigger your risk. When you start out as a consultant or coach or speaker or any business owner really, you need at least SOME capital to pay for your business expenses, especially if you’re still trying to find gigs and clientele.
I actually wish I’d given up my apartment in DC sooner. For almost 2 years it was a $1,200 monthly rent expense that required me to earn a LOT of money every single month. Thankfully, I already had consulting clients lined up so that I was able to bring in enough income to cover everything right off the bat, but that also means I was not able to SAVE very much for a rainy day, let alone travel. Once I gave up my apartment, though, I was able to work a bit less, be more creative and save up some money. I also didn’t feel as much stress from having to chase every dollar to keep up my expensive “lifestyle.”
If you want to start your own business (especially a fickle one like consulting, coaching or speaking), it’s not likely that you will be able to live life the same way you were before, at least for the first few years. The reason you can’t keep spending the same way because you’ll need the “extra” money to invest in supplies, equipment, technology, marketing materials, training, etc. You can’t keep shopping and swiping your Visa card at your favorite stores because you’ll need that credit as “back up” cash flow…for when clients don’t pay you on time, but the rent/mortgage still needs to be paid on the first of the month.
Of course, all of this becomes easier if you have a partner who earns enough to support you while you ramp up your new venture. Or if you have a ton of money saved up to carry you through the lean times. Even then, you may not need to cut as many corners, but it’s still a good idea to explore ways to save on rent and stop the trips to the mall.
*Obviously, this advice also works for saving money in general. When you stop buying stuff and reduce your living expenses, there will presumably be money left over for other things. The problem with new entrepreneurs, however, is that many of us just keep on living the same comfortable lifestyle we were accustomed to from being a full-time, well-paid employee. But I know from experience how that can be a huge mistake, especially down the line when you end up losing a client … or three.
How have YOUR financial habits changed since you started (or started planning for) your own business?
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