If you’re not braced for the uncertainty of life, it will eat you alive. You have two options: spread your risk or pay for your negligence later. What’s it gonna be? Read ahead to discover why you should diversify your assets.
Don’t Say Working from Home Is “Too Risky” (If You Diversify, It’s Quite Safe)
Sometimes people tell me they couldn’t imagine being a freelance writer, because it doesn’t seem “stable.” This is a faulty point and I’ll tell you why. My favorite thing about the freelance lifestyle is that it allows me to diversify my income just like a savvy investor would diversify their stock portfolio.
It would be insane to invest your life savings in a single company, because you would be screwed if it ever went bankrupt. You’d be better off if you invested your money into a lot of stocks that encompass a wide variety of sectors — energy, technology, manufacturing, etc. Your losses in one stock would probably be made irrelevant by your gains in another. That’s the whole point of diversification in a nut shell.
Freelancing isn’t much different. Instead of relying on a single employer, I have several income streams coming from several different clients. One of those clients actually ended a project today, which is a bummer, but I didn’t panic. Why’s that? Because that client only provided a fraction of my total income. In other words, that loss wasn’t painful enough to make me flinch, because I spread my risk. No big whoop.
Don’t Put All Your Ducks in One Row (Trust Me, I Learned the Hard Way)
I wasn’t always smart enough to diversify my income. When I decided to pursue self-employment as a blogger and personal trainer, my stubborn nature got the best of me. I only had two means of income: a Kindle book and online coaching service.
My Kindle book sold very well for the first few months it was available, because I did a lot of research about how Amazon’s algorithm works and put together a creative launch. The book was also pretty darn good, so I ended up getting a #1 ranking in the categories of Women’s Health and Self-Help, and I also racked up quite a lot of coaching clients during that launch. Not too shabby for a first-time author!
The problem? I didn’t spread my risk. All good things must eventually come to an end and I wasn’t prepared for that reality. Book sales slowed down over time until they pretty much stalled out completely. I wasn’t blogging as much as I should have, so I wasn’t getting many coaching applications, either. The shit really hit the fan when my car engine stopped working and I ended up with a mechanic bill so expensive that it wiped out my bank account. Ouch!
Don’t Be Afraid of Failure (It’s the Best Teacher You’ll Ever Meet)
The moral of the story? It’s actually the title of this article. Spread your risk or pay the price later!
Things are a lot better now. I can’t claim to be rolling around in a bathtub full of money or anything like that. Even so, I am proud of the fact that I paid off $2,000 of debt and put away another $20,000 in savings since the day I decided to spread my risk.
Let me demonstrate how this theory works in practice to make sure you understand. I’ve been writing for over ten years, but I didn’t pursue it seriously until a few years ago. Not so long before the publication date of this article, I had approximately zero freelance writing clients. Now I write for several different clients consistently and usually have another two or three temporary projects at any given moment.
Make Diversification Your Number One Priority
“Diversification” is the new theme of my life. Let’s close with a reflection question that will help you apply this material in your everyday reality: how you can reverse engineer your success by taking so many shots that long-term failure becomes almost statistically impossible?
Spreading your risk as far and wide as possible is the smartest thing to do in today’s economy. If you don’t believe me, just ask any fresh college graduate how they feel about the job market. Stop saying things like, “Working for myself would be too risky.” Know what’s “risky?” Depending on one entity for your entire economic stability.
READ MORE OF THE FREELANCING 101 SERIES BY DANIEL WALLEN:
- 5 Questions to Ask Yourself before You Become a Freelancer
- How to Be Productive at Home (When You’d Rather Be Watching Netflix)
- How to Learn a New Skill (without Stressing Yourself Out)
- How to Get Your First Paying Client within a Month
- How to Set and Negotiate a Rate You Can Live with
- How to Write a Pitch That Convinces Clients to Hire You
- How to Write an About Page That Resonates with Your Audience