Money Moves to Make Before Becoming a Full-Time Freelancer
Thinking of going all in with your freelance business? Do this first.
It’s easy to see why so many people are attracted to the freelancing lifestyle…
There’s no one telling you what to do all day 😅
More control over your income
More flexibility with your schedule
Ability to choose the work you do
If you’re thinking about transitioning from part-time to full-time freelance work or hope to walk away from a W-2 job for good, I recommend getting your finances in order first.
Getting your financial affairs in order before you make the leap can make all the difference down the road.
Here are a few financial moves I suggest making before diving in full-time:
1. Give part-time freelancing a try
Are you considering ditching your job to go freelance? It may be worthwhile to do some part-time freelance work first.
I freelanced on the side for over a year before going all in. While I continued to collect a steady paycheck, I continued to improve my craft. I also spent a lot of time on outreach to expand my client base before I ditched my paycheck.
This gave me the flexibility to explore different projects and more time to grow. Starting off part-time gave me the freedom to focus on my business goals without the added financial pressure of wondering how I’d pay my bills. Plus, the real-world experience helped me decide whether the freelance lifestyle suited me.
If you jump all in without having the added protection of a regular paycheck hitting your checking account, you may face financial struggles if the first few months or years are slow-going.
If you still have a full-time job, consider taking on some part-time freelance work in your free time to protect your finances.
2. Reduce your living expenses
Reducing your living expenses is another money move that can be beneficial. When I started my full-time freelancing journey, I had zero credit card debt.
I had also just paid off my student loans. The only debt we had left was my husband’s student loans. By not having multiple debts to juggle, we had more control over our monthly spending, allowing us to keep our expenses low.
A quick recap: In 2014, my husband and I moved abroad. I went into the experience with a big goal: to pay off all my student loans before returning to the U.S.
Since our teaching jobs included free housing and living costs were significantly cheaper, I could afford to throw an extra $1,000 toward my student debt each month. Our one-year contract turned into two — and by the time our whirlwind adventure ended, I no longer had an outstanding loan balance.
Let me be clear. For many people, paying off all their debt (especially student loan debt) before becoming a full-time freelancer is unrealistic.
But looking for opportunities to trim your spending can make a difference. Reducing your monthly expenses can help to ease financial stress as you build your business and increase your income.
One idea is to shop around for a more affordable cell phone or internet plan. Switching providers, downgrading to a cheaper plan, or asking your service provider to apply a promotional discount to your account could help.
3. Research healthcare costs
Many workers favor traditional employment because they value a good benefits package. Employee benefits may include affordable health insurance, paid time off, and a retirement plan with a company match.
As a self-employed freelancer, you’re responsible for covering the benefits that an employer typically provides. Before diving fully into the freelance lifestyle, researching healthcare costs is a must.
You want to ensure you understand your monthly premium costs and any additional healthcare expenses you’ll be responsible for, so you can budget accordingly. If you’re comparing plan options, don’t neglect to review out-of-pocket costs like deductibles, copays, and coinsurance.
Unfortunately, it can be very expensive to insure yourself in the U.S. Knowing what to expect before you dive into the full-time freelance lifestyle can help you set realistic income goals and decide whether you can afford to go full time.
4. Establish an emergency fund
Here’s another tip: Make sure you have emergency savings set aside.
No matter where you are in your freelance journey, you will probably experience income fluctuations and slow work periods. It happens, no matter how well you prepare. Even experienced freelancers deal with these struggles.
Unexpected bills are another financial hurdle. They can (and often do) pop up when you least expect them. With extra money in the bank, you can weather financial difficulties with greater ease.
So if you don’t have an emergency fund, consider prioritizing building one before becoming a full-time freelancer. It’s okay to start with a small savings goal.
Set yourself up for financial success
Whether you’re freelancing in your free time or have a full-time job and are exploring your options for a career move, always keep your finances top of mind.
By doing so, you’ll be able to make informed decisions and feel more confident about your financial health.
Thanks for taking time out of your day to read this. I’ll see you again next week!