Full-time workers receive several guarantees from their employer, including a set paycheck and a benefits package. But as a self-employed person, all these are on you. Because of that, it is critical to set up a financial safety net. There are several ways to do that.
Dedicated Enough Money to Savings
No matter how much work you have coming your way right now, self-employed income can fluctuate from month to month, and some months, you might not earn as much as others. It’s even more important to have a good amount of money set aside just in case. Start with your emergency fund, which can be used to live on if you stop receiving work for a time. This should go into a high-interest savings account where you can access it, but it is still separate. One way to free up funds for your nest egg is by refinancing your student loans from school. You might be surprised at the repayment terms you receive, and the difference in the lower monthly payments can be put straight into your savings.
Get the Right Insurance
If you become unable to work for some reason, whether it’s an injury or an illness, you may not be able to live on your savings, even if you have a nice little nest egg tucked away. Self-employed people do not receive sick days like full-time workers do. That doesn’t mean expenses like rent or mortgage payments won’t come due, however. The right insurance can protect you if the worst were to happen.
If you are diagnosed with an illness, critical illness insurance can help pay for some of your medical bills. Full-time employees often also have life insurance through their employer, so you may want to look to life insurance to protect the rest of your family. While you might view these things as extra expenses, they can protect you and your family in a similar way full-time employees are protected.
Set Up Multiple Streams of Income
As a freelancer, it is critical that you not rely on only one source of income. You don’t have any guarantees when you are a freelancer, and if the work dries up, you won’t get paid like a salaried employee would. Consider looking for multiple companies that offer freelance work. You may need to approach them with a proposal and explain how working with you will benefit them. When you are first starting out, take some time to gain some experience in the industry.
You might want to look for a position at a newer company. Working at a smaller organization allows you to perform many tasks and gain experience in many different areas. A job at a larger organization might be more specialized. You can also consider supplementing your freelance work with a part-time position as an employee. Look for something with flexible hours so it meshes well with your other work. Consider finding one in your area of focus to further develop your skills and add to your portfolio.
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