Have you become tired of working for someone else? Are you ready to be your own boss?
If you’re thinking about venturing into the world of freelancing, you should definitely read this first.
Being a freelancer can be quite lucrative, however, it can also be a lot of work. It has pros and cons just like any other job. Plus, it requires a lot of thoughtful consideration prior to diving in head first. You’re going to need some solid money management skills and a clear way to finance your endeavors.
So, before you quit your day job, here are some things you should know.
It Takes Time to Make Money
No matter how brilliant you may be, you won’t start making money overnight. Often, freelance opportunities are also quite inconsistent, too. That means your finances may fluctuate wildly. Any sort of reliable income may be non-existent, especially as you’re just getting started.
In other words, you’re going to need money in the bank. You should have a savings account with at least enough to cover you for four to six months. By “cover you,” we mean all of your essential living costs.
Before you quit your steady job, figure out how much you’re going to need saved up and start saving.
Factor in Health Insurance
When figuring out how much you’ll need saved up, don’t forget the cost of health insurance. Unless you’re living outside the U.S., this can get quite costly. Continuing coverage through COBRA may be an option, though it’s often far more expensive than the alternatives.
Make sure you crunch those numbers and figure out just exactly how much it’s going to cost.
Start Transitioning Before Quitting
Instead of making a leap of faith, you may want to start freelancing on the side before quitting your job. This way you can build up a client base and boost your savings. If work starts picking up, you may consider going part-time at your primary job, if that’s possible. This can help cushion the transition.
Don’t Expect Timely Paychecks
Another thing you’ll need to account for is unpredictable paydays. It’s one thing to have a fluctuating income, it’s another to not know when you’ll even be paid.
One month, you may finish a massive project and get a large chunk of money. The next, you might not get paid at all. That’s why it’s so important to be careful with your finances and how you spend money.
Ask any freelancer and you’ll find many clients are notoriously late with their payments. Make sure all your clients have signed contracts that clearly state when you expect to be paid. Additionally, it’s wise to ask for a percentage of your estimate up front, too. Trust us, professional freelancers almost always ask for deposits.