If you’re broke, then now is not the right time to jump into freelancing. Period.
A lot of people think freelancing is a great way to make some money fast. It can be, but in most cases, you’re not going to find work that pays well when you’re desperate.
Making a living as a freelancer requires being very selective about the work you take on. If you’re working for content mills and you don’t have any savings, it can be pretty hard to find the time to get better gigs.
In this article, we’re going to talk about why you need a financial safety net as a freelancer. We’ll discuss how much money you should be saving and what to do when you run into dry spells. Let’s talk about money!
Why Freelancers Need a Financial Safety Net
Everyone needs a financial safety net, period.
Most people are one financial setback away from being completely broke. That can be anything from a medical issue, to your car breaking down, or getting laid off work.
You always have options to get back on your feet, but if you want some peace of mind, you need savings.
More specifically, you need to know that if you run into a financial setback, you’ll be able to:
- Pay for it without going into debt.
- Take some time to regroup.
That last part is particularly important if you lose your job.
As a freelancer, you shouldn’t ever rely only on a single source of income. By its nature, our work can be erratic, so you want to have multiple clients at all times.
At some points, you may have more work than you can handle. During others, you’ll see tumbleweeds rolling across your inbox while you’re out there hunting for clients.
Without a financial safety net, suddenly writing jobs that pay $0.01-0.02 per word don’t seem that bad. You end up burning out just trying to make ends meet, which means you don’t have the energy to pursue work that pays what you deserve.
You don’t want to be in that position, so if you’re considering getting into freelance writing, you need to start working on a rainy-day fund. Preferably, you should do this before you start looking for work.
How Much Money Do You Need to Save?
Ask a handful of your friends how much money they have saved and whether they think it’s enough.
I bet you’re going to get wildly different answers, if any at all, because talking about money makes a lot of people uncomfortable.
Just thinking about savings can be enough to make people panic, which is nuts.
If you’re going to jump into freelance writing, getting your first clients can take time. Even more so to build a sustainable flux of work. That means you need several months of living expenses in savings if you want to approach this change in lifestyle the right way.
That’s a tall ask for most people.
Most experts suggest that you need a financial safety net of at least three months of living expenses. The term “living expenses” is key. I live in Argentina, so I could make do with, let’s say, $1000 a month or less, pretty easily.
That means my financial safety net should start at around $3000. As someone who has been freelancing for a while, though, I’d recommend bumping up your safety net to six months if it’s within your means.
The peace of mind you get from knowing your expenses are covered for anywhere between three months to half a year is something most people never get to experience.
More importantly, it gives you a lot of freedom when it comes to deciding what jobs to accept. That’s key if you want to make a serious career out of freelance writing.
If you live in a place that’s much more expensive, building up that financial safety net can be a lot harder. That’s why I usually recommend you keep your day job, at least while you’re starting out as a freelancer. It’s hard to balance all that work, but it’s a safe way to make the transition.
What to do with your money after you have a strong safety net is up to you. At that point, you should no longer be living month to month, so you can splurge a little – buy a new computer to make your work easier, maybe take a vacation, or invest some of that money.
I’m not here to give you investment advice, though, just to tell you to start saving!
What to Do When Work Dries Up as a Freelancer
That’s what your safety net is there for!
If you have at least three months of living expenses in savings, you’re golden. Unless you only send one pitch per week, it shouldn’t take you three months to find work again.
Dry spells happen to even the most talented freelancers. At some point, work dries up and you may have been too busy to pursue clients before, so you need to get back on the horse as quickly as possible.
The key during these periods is to be mindful of how you spend your money. Dry spells in work are not the time to take on any additional financial burdens. However, that doesn’t mean you have to cut back on all your regular expenses.
Your safety net is there to help you get through these times and give you peace of mind while you find more work, so take advantage of it.
If you make it to that point, you can be very proud of yourself, because that means you’re in a better position than most freelancers ever are!
Conclusion
Most people don’t have much in the way of savings.
I’m not talking just about freelancers, either. Most American families don’t have enough savings to get them through a month or two without work. In my experience, most freelancers are even worse off.
The type of work we do can be precarious. If you want to thrive, you need to be more financially conscious than your friends with regular paychecks. That means pursuing well-paid work aggressively and stashing away a large slice of your earnings for rainy days.
If you can keep up that mentality year-round, then you might have what it takes to thrive as a freelance writer.
Do you have any questions about how to save money as a freelancer? Let’s talk about them in the comments section below!