There is a different kind of allure in working on your own terms and on your own time schedule. Some people imagine it to be a very liberating experience that’s why they are attracted to a life as a freelance worker rather than a regular 9-5 employee.
However, contrary to others’ belief, going freelance is a path that is not for the faint of heart. While it has its own benefits, it definitely has several disadvantages as well.
On this post, we give you some tips to help you prepare become a freelancer.
First of all, you have to acknowledge the fact that going freelance is replete with uncertainty. And uncertainty is a scary thing. You are on your own. Unlimited opportunities are yours for the taking but nothing will come easily. On top of that, there are other things you have to deal with such as…
Periods of highs and lows
Or feast and famine, where one day you get a hefty payday after completing a writing or programming project then the next month you lose your most important client. Your earnings are subsequently reduced. After the high comes the low. Are you prepared for this roller-coaster ride?
Late payments/No payments
Sometimes you have to deal with clients who don’t pay right away. Some companies who hire freelancers disburse payments only months after your project is completed. You might even come across clients who will not pay at all. Do you have enough savings to cover those bad weeks or months?
You have the whole world competing for the freelance work you are aiming for. Some of them offer outrageously cheap services from another part of the world. How will you cope with the competition? Do you have the mental aptitude for it?
Now here are some of the things you need to do when considering life as a freelance worker.
Save for rainy day fund
Before you dive into uncertainty, you have to have at least some form of a net to catch you if you fall. Before quitting your day job, save for at least 6 months’ to a year’s worth of expenses.
Having a stashed cash will give you peace of mind to follow through and to avoid panicking when there are no available projects. It will also help you avoid short-selling your services as you don’t need to take any work, however cheap it is, just because it is work.
Reduce your expenses
This should come automatically since you will not be paying for daily expenses such as transportation, dining out, office clothes, etc. However, it might be tempting to think that because you are able to save money on other expenses, it is absolutely fine to spend the savings on shopping for appliances, a new gadget, etc. Instead, take advantage of these savings by socking away more cash or even opening a Roth IRA account. Earn more, spend less. Most important, don’t get into debt!
Get a health coverage
Medical expenses aren’t cheap especially now that you won’t be covered by an employer’s HMO plan. You might want to consider getting a health coverage to spread the financial risks associated with sickness, which by the way, happens to all of us. We just don’t know when.
Websites such as freelancersunion.org provide information for freelancers on where and how they can get insurance for themselves and their families. They can even give you a quote how much a health, dental, disability insurance costs in your area.
Let your family know about your decision
Your decision will have an impact on your family’s finances. Either positively or negatively, you can’t tell that yet, but your family, especially your spouse should know your decision so that he or she can also prepare financially.
If you can even properly explain the repercussions of your decision to your kids, you might even get their support, and help you reduce the family’s household expenses.
Be great at what you do
Let your work speak for itself and more work will surely come. If you do great job, clients will come to you and beg for you to work for them. You will be fully booked for months; you will have a big chance of earning far more than you did in your day job.
Many freelancers find their chosen path both fulfilling and financially rewarding. They are somehow in control of their own time and they are able to spend more time with their family. It is not, however, for everyone so before you decide going it on your own, make sure you understand the pros and cons.