A few years back, I wrote a Father’s Day musing — “Is entrepreneurship genetic?” — in an effort to assimilate some of the business lessons my dad taught me. In advance of the upcoming Father’s Day, I want to address one of his principles in more detail: specifically, the idea of having a go to hell fund.
Personal finance gurus will tell you that building up an emergency fund of 3 to 6 months should be a priority, and I agree. You never know what’s going to happen to you, and you need to be able to pay the bills.
But your go to hell fund addresses financial security from a different perspective: It’s about having control and taking action. When I started my first job, my dad advised me to have enough money stashed away to escape a bad, negative, or unproductive situation. Which is precisely what I did, quitting an aggravating job in order to ride my bike across the country. (Didn’t make it, alas…got run over by a guy who fell asleep at the wheel of a pickup truck in Montana.)
At the time my dad said it, I understood the concept purely in terms of being an employee, and being able to tell a boss “I’m out.” What I’ve found is that, for freelancers, it’s even more important. The key is this: Your go to hell fund not only allows you to manage and/or extricate yourself from bad clients and situations, it enables you to avoid them in the first place. It’s not something to be used on a whim; it’s a business tool with strategic purpose:
- You can say “no” to freelance work without worrying about paying the bills.
- You don’t need to take jobs out of desperation, and therefore can negotiate from a position of strength. (That’s also a morale boost.)
- You can dump bad clients without hesitation, which frees you up to attract more of your favorite freelance projects and work harder for your good clients.
It’s a tough economy out there for a lot of freelancers, and saving money can seem like a tall order. But it comes down to choices: Either you build wealth to control your own destiny, or other people and projects will control it for you.
What’s the most important business lesson your dad taught you? Do you have a go to hell fund?