The Most Important Financial Lesson I’ve Learned As a Freelancer

Here's what I did wrong and how to avoid making the same mistake.

Photo by Leone Venter on Unsplash

Hello and Happy Wednesday!

Today I’m sharing a hard lesson that I learned in my early freelancing days. Hopefully, I can help at least one person avoid making a similar mistake. ​

Let’s travel back in time. It’s late 2019, and I’m in my third year of business. Suddenly, I lost a client who accounted for around 60% of my income. 😱

It was a travel writing client who gave me a lot of creative freedom. They were a dream to work with: they encouraged me to write about topics that interested me, gave great feedback, and paid me weekly, within minutes of invoicing. (…I know!)

As you probably guessed, I was crushed. Since things had been going so well, I never saw it coming. But I was given two weeks’ notice, and then poof, the work was gone.

(Quick side quest: If you’re thinking, “they gave you notice?!” I echo your thoughts. Since then, I’ve learned that in the freelancing world, it can be rare to be given notice before work disappears.)

Photo by Minxi Mao on Unsplash

My editor assured me it had nothing to do with my work. Instead, the decision resulted from a shift in business priorities. The agency had decided to stop publishing content on the two travel websites it had been managing.

For ten months, I had been getting paid to write multiple articles each week for both sites. The money I earned from these projects made up a significant part of my income that year. In fact, that freelance gig was the primary reason I could afford to save up for a down payment on a home.

While I had other work at the time, none of it paid as well or was as plentiful. And remember that down payment? Adding to my stress was the fact that we had just closed on our first home three months earlier.

What followed was a challenging year for my business, as the start of the COVID-19 pandemic was just around the corner. Due to uncertainty and tightened budgets, work from other clients became less plentiful.

Luckily, with time, things improved. By early 2021, my business and my bank account balance were in a better place.

This is what that experience taught me

That experience taught me an important lesson: Never rely on a single client for most (or all) of your income.

This is a good practice to follow…

• Even if you feel secure

• Even if you’ve worked together for years

• Even if they’re praising you for your efforts

• Even if you’re receiving a steady flow of work

• Even if you have extra cash in savings

You could lose that client tomorrow and with it, the income you’ve relied on.

Photo by Katie Harp on Unsplash

Here’s how to protect yourself

Clients come and go. And over time, their needs and goals may change. As a freelancer, you have little control over that.

But you can lessen your risk of losing a significant portion of your income by diversifying your client base and having multiple income streams.

I had gotten too comfortable relying on those weekly assignments. But had I spent more time seeking additional opportunities, I likely would have felt less financial strain in the months that followed that loss.

Here’s my advice: If you have a client who accounts for a large portion of your income, I encourage you to diversify more.

If you need to make some changes, I suggest you start setting aside time to seek additional work. Make it a priority and build it into your routine.

It takes time and effort to find more clients. But by diversifying your client base, you can improve your financial security. If one client reduces your workload or no longer has work, you’ll feel less financial strain.

While this lesson was difficult for me to learn, it’s forever etched in my memory. It serves as a constant reminder of why it’s necessary to prioritize diversification and make time for continued outreach, even when things are going really well. Especially when things are going well.

And with that — I’m off to spend some time on outreach!

What difficult financial lessons have you learned as a freelancer? Let me know by replying to this email.

If you have a topic you’d like me to cover or feedback to share, I’d love to hear more.