Do you dream of working for yourself but are afraid of financial uncertainty? You are not alone! The fear of not being able to pay your bills is probably one of the biggest obstacles keeping people from following their freelance ambitions. And to be fair, it does sound pretty scary to leave your full-time job without knowing if and when you are going to financially succeed with your freelance business. However, there are a few ways to reduce financial risk while still living a freelancing life.
1. Understand your finances
Maybe you love playing around with numbers and you have a clear understanding of how much money you spend every month. If so, congratulations, this is an important aspect of freelance life and you are one step closer to success already. And if not, sit down and go through your finances before you quit your full-time job! It is crucial to know how much you are spending. That’s the only way to find out how much money you have to make each month as a freelancer and it’s also the base for calculating your rates and prices.
Check if it is possible to reduce your spending in some areas of your life and maybe start saving a bit before you start freelancing. There will be times when money is tight and work is slow, and savings can help you come out on the other side. Understanding your finances, knowing how much money you need to survive and reducing your costs of living where you can while stacking up some savings along the way creates the foundation for your financial independence.
2. Have a slow transition
We understand that you want to start your freelancing career ASAP, but a little patience can go a long way. You don’t have to make a clear cut and go from full-time employment to full-time freelancing right away. Especially in the beginning, you won’t know how much work you actually have, and it takes some time to get used to the rhythm of freelancing and remote work. Make it easy for yourself and maybe start off by talking to your boss and asking to reduce your hours. You can start your freelance business on the side and build up your client base until you are confident you have enough freelance income to sustain your lifestyle. This is when the final leap into self-employment makes sense and comes with a much reduced financial risk.
3. Use free resources whenever possible
Maybe you are one of the lucky ones and your freelance business takes off immediately, but for the rest of us, it will probably be a bit of a rollercoaster financially for the first couple of months and maybe even years. On top of that, depending on your area of work, you will also need to buy licenses or invest in equipment to deliver your services. This can easily add up and become a big monthly or annual investment. So, having a lot of work-related expenses can take a toll on your business.
One way to reduce cost is to use free software and tools whenever possible. If you are not a professional graphic designer and you just need a tool to make your presentation look a bit nicer, there are tons of free design programs out there that you can use without spending money. There are a ton of free invoicing and accounting software out there and you don’t need a second phone or new laptop right away if your equipment is still doing fine. If possible, keep those expenses for later, when your business is doing well and your basic financial needs are covered.
Another interesting thing to check is if your government provides any free resources for freelancers in your area. This might be free support when it comes to things like doing your taxes or checking your business plan. Take advantages of these offers first before looking into paid services.