Last Updated on Apr 7, 2020 by James W
The dream of quitting that day job and going freelance is one shared by millions — and millions have already done it. There are a ton of advantages to the freelance lifestyle, the freedom to set your own schedule and pick your own projects not the least among them. But freelancing also comes with its own costs: long hours, potential financial instability, and a responsibility to be prepared. Here are a few steps you can take to make sure your budget and bank account are ready to keep up with your freelance dreams.
Make a Budget
If you don’t already have a solid budget, now is the time to create one. As a freelancer, you’ll need a firm grasp on your household bills and business expenses. There are some great tools for making and keeping a budget. Once you have your expenses down on paper (or on the screen), you’ll know just how much you’ll have to save before you can quit your day job. Which brings us to our next item…
Have Some Savings
There’s a reason this is a top item on any potential freelancer’s “to do” list. Saving money is critical. Under normal circumstances, many people say you should have a few months’ worth of expenses in the bank to account for emergencies. For a freelancer, this probably goes double. Sure, you might get enough clients to pay your bills right away — but you might not. As a freelancer, you’ll also have to account for things that may have normally been taken care of by your employer, like taxes and health insurance.
Trim the Fat
Once you’ve figured out how long it will take you to save up enough money to quit your day job — and possibly broken out the whiskey — it’s time to see where you can optimize your expenditures to make things a little easier for yourself.
- Consider trading your gym membership for a stationary bike or treadmill. If you’re working from home, that just means less time to exercise.
- Plan on eating more meals at home. Yes, we’re all busy, but eating out is one of the biggest ways to rack up your food budget.
- Trim your transportation costs. Compare car insurance to see if you can get a better rate. Look into public transportation, carpooling, or biking.
- Check out passive income opportunities, such as selling a training course.
- Take a long look at your entertainment expenses and decide what you really need, and what you can live without.
Most of all, plan to live below your means for a good while. Freelancing is, for the most part, not as stable as working full-time for someone else. The more you can live without, the happier you’ll be.
Have a Backup Plan
Last but not least, you should be prepared for the worst. If things don’t work out for your freelance career, what will you do? Get your old job back? Find a new full-time career? Move back in with your folks? These are not easy questions to answer, but they must be considered before you pull the plug on your old life and set out for a freelance career.
Freelancing can be a challenging, exciting way to earn a living. It’s not without its pitfalls and obstacles, but with a little long-term planning and a shot of courage, it can also offer huge rewards. Is today the day you start planning your freelance future?