Consider these questionnaire before you go freelance
Quitting a full-time job in order to become a freelancer is both an exciting career transition and a tough decision to make. You get absolute control over your schedule, the projects you choose to work on and of course, the wages.
However, the decision to become a full-time freelancer also brings along a number of financial questions and preparations. Since you are reading this article, I assume you too are thinking of something similar. So go through the five questions below – and answer – before you make the leap.
1) How much should you save?
If you have no savings at this moment, how will you pay for your bills and sustain your livelihood once you quit your job. You should know that your freelance career will take time to establish. Do you know the break-even period of your freelance career? Do you feel comfortable with a six or one year’s time-frame to get your new career off the ground? Do you have saved enough to satisfy your requirements during this period? It’s evident that the more you save up, the less risky your freelancing career will be.
However, things get totally changed if you are the sole breadwinner of your house. In that case, the risks associated with your career change increase drastically, since you’ll be responsible to manage the entire household expenses. Check your monthly household budget to get a rough idea as in how much you should save.
Most experts suggest that you need to keep at least a or two year’s worth of expenses in a separate savings account to cover for the expenses before you start working as self-employed.
2) What is your minimum household budget?
What is the bare minimum amount you require to meet all your household expenses each month? Suppose it’s $2,500 a month. In that case, you’d require to built up a savings of at least $30,000 in order to start the life of that of a freelancer.
Don’t forget to add up the costs of doing your freelance business along with your monthly household expenses.
3) Do you have passive income streams?
Do you have any passive income stream apart from the regular paychecks that you receive from your day job? You can make the process of becoming a freelancer much easier by creating multiple income streams. If you have any special skill set, you can use that to make some passive income.
May be you could offer business consulting, or offer teaching online. Do you have any kind of investment that earns small dividends or interest each month? You could accumulate those for the big saving.
Every bit of income can help you save up faster and ease the transition of quitting your job and entering the freelance world.
4) Are you prepared to give your everything?
How much time you think you can spend each day to find work after getting back home from your day job? Are you prepared for sleepless nights and hectic weekends building your business?
During the early days, there won’t be any client of your and you’ll need to proactively seek them out and build a solid network out of scratch. How much time you give your business in the wee hours, will determine your success.
Freedom is never free. You need to earn it and this includes financial freedom too.
5) Do you have any backup plan?
What if your plan A fails to live up to your expectations? Do you have a plan B in place? You ought to have one in your arsenal as you never know what lies there in the tomb of future.
Create a backup plan of action for any possible scenarios you and your family might encounter.