Freelancing can be scary. As much as it’s true that jobs aren’t nearly as secure as they used to be, especially for Black people, they still offer a financial predictability that freelancing can’t really compete with until you’re established.
That though, shouldn’t slow you down for trying it yourself. Jumping in with both feet isn’t the only option. It’s perfectly possible (and honestly, recommended) that you prepare yourself well ahead of time before you make any big leaps. That’s why I want to share with you 3 ways I prepared financially for life as a freelancer before I actually did it.
Saving
Full disclosure: I didn’t choose to make the big jump. I started freelancing after a layoff. Thing is, it was a layoff I knew was coming, and it was from a job that I hated and that was destroying my health, so months, even years before, I set up an emergency fund — Mostly because I knew any day, I might just walk out of that place and not come back to traditional employment at all.
Cutting Expenses
Recurring expenses are an even bigger burden and stress when your income varies, so wherever I could, I kept these low.
The biggest change I made was paying off my car and keeping it maintained so I didn’t have a car payment. I also cut unnecessary insurance and subscriptions (like expensive supplement and vitamin habits that weren’t giving much return, but that were easy to ignore on a steady income.) I also dropped my unlimited gym membership and switched to a per-class plan.
While freelancing can eventually mean even higher income for a lot of people, at first, it will likely mean lower. It’s easier to get through that period of less income if you plan for it ahead of time where you can…better to choose to downgrade early than to be forced to later.
Changing Habits
…so this is a never-ending process for me.
Before I went out on my own…even before my layoff was imminent, I started changing some habits. I used to go to new restaurants with friends every weekend, stress shop, and spent entirely too much on weird random items at the grocery store…and then there was Amazon.
I still allow myself to do some of those things, but it’s very much in moderation. The great part, is that it’s not very difficult to walk away from those habits now that my stress levels are so much lower, and I enjoy my life much more overall.
Even if you are only vaguely considering freelancing, start working your way through these three points…worst case scenario, you’ll be more financially healthy.
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Megan
Your advice above is the smart and responsible way to do it. My motto is Be Free(lancing) or Die Tryin’!
Great advice, thanks for sharing! What do you think is a reasonable emergency fund for a freelancer? 6 months of expenses? A year? Saving 10% my base salary for a year, it would take years.
Hi!
Most people suggest a minimum of six months like you said, but I know that can be a lot. It might be easier to simply set up smaller goals while you focus on getting your freelance income up to full-time levels. That’s more important IMO than the emergency fund (if you’re doing this while employed) and is a lot more motivating.