Things to Consider Before Going Full-Time Freelance

Unemployment rose to 9.8% in August, according to numbers released a few days ago. Companies are still laying off employees as they look to reduce their payrolls and expenses — and the publishing industry has been particularly hard-hit. That leaves a lot of unemployed writers out there. But a writer can use his skills on a for-hire basis, akin to the consulting that people in other industries do. Freelancing can at least provide some income for someone who’s lost his job. The work for freelance writers is out there, because companies don’t have to pay benefits for these temporary employees — and that’s a big part of their attractiveness.

The income stream from freelancing, by nature, tends to be erratic. Sometimes you’ve got a large project lined up for a few months. Other times, an individual assignment may come if a publication is in a pinch. Or perhaps you have one dedicated assignment monthly.

The lack of a steady income is why a good entrepreneur — and that’s what a freelance writer is, at heart — should have a plan. The Frugal Dad blog has an excellent post called “The Entrepreneur Fund: One Year of Projected Expenses” that I believe is a must-read for anyone looking to take the plunge into full-time freelancing (voluntarily, of course). Having a safety net can make the difference between a leap of faith and a well-thought-out career move.

Frugal Dad advocates creating a list of all household expenses and using them as a basis for constructing an “entrepreneur budget.” Adjust the budget as necessary — working from home might mean less gas for the car and a smaller clothing budget, but an increase in health insurance costs for a personal policy. And most importantly, he suggests having a year’s worth of funds saved to cover expenses should the freelance work dry up.

These suggestions are also excellent for those who have had the misfortune of being laid off. The savings cushion for expenses is similar to that of an emergency fund for household expenses. For the most part, the same household expenses will need to be covered in either case, plus additional budget items like health insurance, advertising and web hosting, if needed.

Just be sure to look before you take the leap!

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