How To Secure Your Finances To Freelance Full-time
Leaving the security of your 9 to 5 is no easy feat.
Actually it’s pretty terrifying.
If you’re anything like me, I was little skeptical about a full-time freelance career covering my bills consistently. And as a freelance writer who started off making around $50 a week compared to my 9 to 5 income averaging around $300 a week, I had a lot of doubts!
These doubts were enough for me to cower behind my 9–5, and tell myself that I couldn’t just quit on some entrepreneurial hunch.
But the truth is I could.
With a plan and some preparation, I could mostly get everything I wanted from a freelance career and go full-time.
And you can too with a few tips.
1. Figure out what you need to survive
This is probably the easiest step to start growing your income as a freelancer, and it applies to any type of freelance work you do!
Whether you’re a writer, a developer, or graphic designer, you have to know how much money you need to live if you plan on abandoning your regular biweekly paycheck.
You can do this easily by making a spreadsheet or list of your monthly expenses that keep your household afloat. Adding all these expenses together will give you a baseline for what you should be bringing in.
For example, if you’re expenses come to around $1200 every month, then you should aim first at generating that much income or more.
Remember, this is only the minimum that you need to survive. It’s not your desired income or the rate you should be charging your clients. It’s simply a guideline that indicates how much you should be working to keep your finances in shape.
2. Save your money — aggressively
In this business, you always need to have money set aside.
I suggest having 6 months of living expenses in an emergency fund, which for some of us can be a large amount to save, but please believe me when I say that it’s 100% worth it.
This sucks to say out loud, but there will be dry spells in your work.
You never know when they’ll come or how long they’ll last, but they’re almost guaranteed for most freelancers who take the jump for the first time.
On top of saving close to 30% for your taxes, try to save another 20% to cover any unexpected gaps in your work.
3. Start creating your own benefits package
One thing that I knew I’d miss about the security of my 9 to 5 were the benefits.
Medical insurance, vision, dental, 401(k) matches, and even weekly catered breakfast are paid for by your employer. These benefits can easily be replaced if you spend the money too. I suggest saving 20% of your income to start funding your own benefits package.
When you become a freelancer, you become your own boss, receptionist, HR, and even payroll & benefits administrator. It’s important that you have a handle on all these things so you’re able to focus on your craft!
4. Have your first few clients lined up & ready to pay you well
Making the jump will make you feel a lot better if you have clients lined up ready to pay you for your work.
And I’m not talking about $30 gigs on Upwork or Fiverr, I’m talking about the big bucks that’ll replace your regular income.
$100+ gigs only. That’s just my rule of thumb that suits replacing my income. You might require more or less, and that’s okay.
If clients aren’t necessarily lining up to pay you that much yet, then make a list of at least 40–50 people who could refer you to some work. This includes anyone in your LinkedIn network who you’re comfortable asking for leads and that’ll help you if you’re in a bind.
Networking and word of mouth is always a strategy to rely on if you want to keep a constant cash flow.
- Figure out how much cash you need to survive every month, then start gradually replacing your regular income with your freelance funds.
- Save 6 months of living expenses in your emergency fund. Save 30% of your freelance income for taxes, and then save 20% to continue adding to your emergency fund or building your benefits package.
- Get your clients lined up before making the jump! And remember nothing replaces good networking.
And finally, remember to be real with yourself.
Full-time freelancing is a cutthroat career. If you’re not saving as much as you think you should right now, then reevaluate your situation. Maybe the comfort of your 9 to 5 for the next three months is all the time you need to save a sufficient amount of money.
Don’t let the fear of making the jump paralyze you from making it in the first place — but you shouldn’t jump without a parachute either.