Overview
In this story, I’ll detail how I’ve survived as a freelancer for the past 6 months.
I’ll also share a Google Sheets link to my personal finances to show how doable and realistic it is to put your skills to work on your own terms.
Specifically, I’ll discuss:
- Why take the road not taken? (Why freelance?)
- How to write a reasonable freelance income goal
- My Personal Finances (Google Sheets link)
- Managing activity (tips to keep growing your business)
- Key Takeaways
Why take the road not taken? (Why freelance?)
#1 Consider Opportunity Cost
Whenever we do something with our time, we are giving something up in exchange. In my case, I turned down an offer for an $80k/year job as an aerospace engineer.
“Why the **** would you do that?!”, you might ask.
Logically, you’re right — it makes no sense to trade in $80,000/year for ~$12,000/year to ~$16,000/year as a freelance software engineer (that you have no guarantee of making, by the way).
In fact, even if after taxes and $2000-$3000 in rent & expenses at the $80k job versus living at home with my mom as a freelancer, I’d still be saving almost 3x more with the $80k job.
#2 Money isn’t everything… so what else am I getting?
According to Fiverr’s Freelance Economy Impact Report, Rockbridge Associates market researchers interviewed 861 skilled independent workers in the US about their beliefs about freelance work.
From the report, 79% agree that freelance work gives them the freedom to decide where and when to work.
In addition to freedom, here’s a summary of my personal/emotional reasons:
- Freedom allows me to maximize my personal growth over time
- I don’t fit with DoD or government contractor culture
- I’d rather do something extremely uncomfortable in my 20s and grow experience over money
Above all else, I craved to contribute my creativity and produce value to the world on my own terms in a practical way — to walk a different path, else I’d be a fool to not have at least tried.
Two roads diverged in a wood, and I —
I took the one less traveled by,
And that has made all the difference.
— The Road Not Taken by Robert Frost
How to write a reasonable freelance income goal
From the book The 7 Habits of Highly Effective People by Stephen R. Covey, Habit #2 states you should “begin with the end in mind.”
For most folks, personal finance is all about saving for retirement. The key questions usually are:
- When do you want to retire?
- How (i.e. what lifestyle) do you want to retire?
For me, the goal is to reach financial independence with a modest lifestyle (expenses under $2000/mo) by age 45.
Now, to generate $2000/mo in passive income, you’ll need around $792,000 in investments according to the 4% Rule of investing for retirement. To be conservative, I used 3% in my calculations below:
$2000/mo * 12 mo/year = $24,000/year
1/0.03 = 33 * $24,000 = $792,000 investments needed
You can find all my calculations in the Google Sheet’s FIRE tab (which stands for Financial Independence Retire Early) in the next section. Here’s a screenshot from the Google Sheet with different “retirement” options.
The cells you can edit are in yellow. These are:
- $/mo to generate — how much you’d like to withdraw from investments based on the 4% rule I mentioned before.
- retirement age — the age you’d like to retire. You can also edit the Time (yrs) column to subtract your own age.
- monthly living expenses — how much you’re already covering with your primary income source (for most it’s a job).
The other numbers you should pay attention to are:
- need $add/mo — the amount you need to deposit each month to reach your retirement goal.
- Time (yrs) — the amount of time your investments will have to compound.
- $/yr takehome needed — the amount you need in after-tax yearly salary.
You can follow a very minimalist plan like me, others might “soft-retire” working part-time as a barista, or retire as a millionaire (and all you need is $85/mo).
Feel free to copy and edit the numbers to fit your retirement goal!
Note that my plan is only a plan and can completely fail for any number of unknown factors — tax rates change, unexpected expenses pop up, or maybe I won’t be so lucky with the job market.
Everyone’s got a plan until they’re punched in the face.
— Mike Tyson
My Personal Finances (Google Sheets link)
I want to give you the whole picture of what my personal finances look like so that you can decide how practical or impractical being a full-time freelancer can be for you.
My Financial Situation
But before the big reveal, there are a few things I should note about my personal financial situation:
- I have no college or grad school debt
- I live with my parents.
- I don’t have any revenue-generating properties
- I don’t have significant passive income from other sources (the only exception might be dividends from investing which, as you’ll see from the Google Sheet, average just over $30/mo).
Needless to say, my financial situation isn’t great but also isn’t the worst — I’m lucky to be completely debt-free, but I also don’t have any stable income sources (like a salary, or rental property income).
As a freelancer, you’ll have to rely on what you can make by yourself.
Google Sheet Explained
Finally, here we are! Here are my no-BS personal finances from January-June 2021.
Feel free to copy and use this Google Sheet for yourself!
Directly from the spreadsheet, here’s a graph of my income since January 2021:
Though I had a slow start in January, I’ve gotten to the point where I’ve set up my personal process to keep my freelance income relatively stable. And as long as I keep investing +$750/mo, I will reach financial independence early.
Managing activity (tips to keep growing your business)
So if you’ve made it to this point, congratulations and thank you for reading this far! Here are some of the survival tips I’ve learned:
Tip #1: Take it one day at a time.
This doesn’t get said often enough, but it’s important. It will feel impossible if you focus too far in the future. Don’t get overwhelmed, figure out what you have to do today, and that’s it.
Here, I even wrote a blog post a while back about how I write TODO lists if that helps.
Tip #2: Experiment when business is slow.
Do all sorts of growth activities — make YouTube videos, write blogs, contact potential customers, make Gigs on Fiverr, write proposals on UpWork — just experiment non-stop instead of sitting around waiting for business to come to you.
Never stop learning and always seek feedback — even if it doesn’t earn any money right now.
Know that it eventually will, one way or another.
Tip #3: Write proposals at least every week.
If you’re not a fan of writing proposals, freelancing is the wrong line of work for you. Better to just find a normal 9–5 job if this is the case.
Being good at writing proposals is what keeps you alive as a freelancer, especially when you’re starting out.
If you’re having trouble with proposals, I recommend going on Fiverr and learning how to write a simple Gig — I’ve found that my best-performing proposals are structured similarly to how Fiverr Gigs are structured.
Tip #4: Do projects in small milestones (1–2 weeks at a time).
Small milestones help you manage risk for yourself and your clients.
Clients can be wary of you — you’re a stranger to them, after all. They’ll be more open to accept your proposal if you can reduce their anxiety.
For example, I recommend ~1–2 days’ worth of work for the first milestone — something you won’t mind doing for fun. Also, offer a full refund — this shows your client what you can do without any risk to them.
Tip #5: Don’t just freelance with your free time
Remember the reason you’re freelancing is to be free. So use your free time wisely.
Start businesses, make products, provide services, reinvest in your education, reconnect in your relationships.
Push yourself to do things a 9–5 person can’t, and don’t forget to have fun while you’re doing it.
If you’re not having a bit of fun in your line of work, you’re doing something wrong.
Key Takeaways
- Freelancing is one of the most rewarding things you can do — everyone should do it at least once in their life to see if they can attain independence from needing a traditional job.
- Evaluate first why you want to be a freelancer, then make a plan to make your goals practical. Also recognize that any plan is never set in stone, and that you’ll inevitably have to adjust it to meet new circumstances.
- Feel free to use my Google Sheet to make your own plan for financial independence!
- Consistency and being systematic is the key to freelancing — write proposals, do small milestones, seek feedback, adjust, repeat (and, of course have fun).
If you like what you read and want more, please clap for the article, and follow me as a writer. Also, I engage with the comments in all my articles, so feel free to ask a question or start a discussion with me!
Future Reading
Here are some of my most relevant stories to this one. Enjoy!
- How I got my first freelance contract
- Conquer big decisions with math (Decision Analysis)
