The Mindset Shift That Doubled My Income in 1 Year
Why saving isn’t always the best option
Two years ago, I was sitting in my accountant’s office, having my taxes prepared.
(Yawn)
As we were wrapping up, he said,
You know, if you had spent more on your business this year, your tax bill could have been lower.
That sent my brain into a tizzy.
You mean, I could have used that money to grow MY business instead of handing it over to the tax man?
Yep.
This is one of those seemingly obvious “secrets to building wealth” that most people abstractly “know” but don’t often put into practice.
Now, I want to mention that I’m not “anti-tax.”
I know some of that money goes to help people, pave our roads, etc.
However, small businesses are the lifeblood of our economy.
So, if I can legally use more of MY income to grow MY business, you best believe I’m going to do it.
From Saver to Spender
Up until this point, my goal had always been to SAVE as much money as possible.
When it came to my business, I always looked for the cheapest options because —
Why WASTE money on expensive tools and services when I can get by using FREE stuff and doing EVERYTHING myself?
This strategy of being hyper-frugal actually helped me start my business when I had NOTHING in the bank.
No joke, I was totally broke when I started working for myself — and I carried that mindset with me for almost a decade.
At a certain point, I found myself limited by the functionality of free tools.
I was also maxed out on the number of hours I could work each day.
As a result, my income became stagnant.
Money = Leverage
At this point, I started looking for ways to use my money as LEVERAGE.
For example, if I had an extra $1,000 dollars and I put it in savings, I’d have to pay 30% of that in taxes, leaving me with $700.
However, if I spend $1,000 on advertising for my business, I could deduct the ad expense (meaning I don’t pay taxes on that money), and I may make an additional $300 profit from those ads — leaving me with $1,300.
ugh… $700 < $1300.
See the difference?
As long as I keep investing that money back into my business, I can keep deducting those expenses, and my business will continue to grow like a snowball.
The key to this is knowing how much you are able to invest back into your business each month — which requires some planning.
Budgeting is Key
These days I still try to save as much as possible when it comes to my personal expenses because I can’t deduct those.
Every little thing I spend money on in my personal life, I have to pay taxes on.
Bummer.
So, I created a monthly budget that includes my:
- housing,
- car payment,
- utilities,
- insurance
- food,
- student loans,
- savings,
- investments,
- and an amount for fun, “guilt-free” purchases.
I stick to this religiously.
I currently have six months of expenses saved for an emergency, so everything else gets funneled into my business account.
I know many financial advisors recommend having a year of expenses saved, and I am working toward that by adding a modest amount to my savings each month, but I’m no longer saving as aggressively.
My goal each month is to allocate all of the remaining funds to growing my business.
If I spend it on my business, I can deduct it from my tax bill.
What I’m Buying
Here are three main categories of business expenses that helped me double my income last year:
1. Advertising
Paying for Amazon, Google, and Pinterest ads has had the greatest impact on increasing my income.
If you have a decent product and you can get it in front of more people in your target market, you will make more money.
It’s basically a math equation.
2. Tools
These days I don’t think twice about investing in tools that have the potential to help me earn more income.
The one tool that has increased my income the most is Helium 10 because it helps me uncover profitable products and keywords on Amazon, as demonstrated here.
Second place would have to go to Jasper AI, which is an AI writing assistant that was specifically designed for small businesses and content creators.
This tool helps me create SEO-optimized content, articles, sales copy, YouTube video scripts, book outlines, and more VERY quickly.
I feel like it's my second brain.
If you want my opinion on ChatGPT (which is free) versus Jasper AI, I wrote about it here:
I also use VidIQ for researching keywords and trending videos on Youtube.
Honorable mention goes to Teachable, Thinkific, and ConvertKit, which are software tools I use to sell digital products.
3. Services
This one is a work in progress for me because I have a REALLY hard time delegating tasks.
I like to do EVERYTHING myself.
But I only have so much time in a day.
So, I recently started challenging myself to come up with new and creative ways to use Fiverr services to leverage my time.
So far, I’ve used Fiverr and 99 Designs to create book covers (which is something I used to do myself even though I’m NOT a designer.)
I’m also starting to work with video editors to outsource content creation for my faceless YouTube channels.
I don’t have great systems in place for outsourcing yet, but I know it's something I need to get better at if I want to continue to grow.
TLDR;
By spending more on advertising, tools, and services, I was able to use my money as leverage (rather than paying it in taxes) and was able to double my income from the year prior without working more hours.
This strategy might seem basic to some of you who have been working for yourself for a while and are familiar with tax deductions in the US.
However, if you are a newer creator, you may not know this option exists or understand the impact it can have on your income.
Or, you may not have created a plan to intentionally spend more to grow your business.
Please note that this article is not meant to be viewed as legal or financial advice.
I implemented this strategy after speaking with my accountant, and I recommend that you do the same with someone who is qualified to evaluate your specific business if you have further questions.
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This article contains my referral links for Helium 10, VidIQ, Jasper AI, and Medium, which along with Teachable, Thinkific, and ConvertKit, are some of my absolute favorite business tools for content creators.
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