One big concern that comes up when one is considering pursuing a freelance career is what about benefits, like health insurance, retirement, vacation?
While the faculty here at Scoping International are not claiming to be financial experts, by any means, we do have a few years of freelancing under our belt, and we’re happy to pass along some gems we’ve gleaned from our personal experiences. Here are some tips to consider when deciding if scoping will work for you, especially if it is your or your family’s sole income.
Plan for the ups and downs
A factor that can cause a lot of hesitation when we’re deciding if we want to let go of the 9:00 to 5:00 lifestyle is letting go of the predictable income. While freedom and flexibility call to us, not knowing exactly how much will land in your bank account is definitely something that can give us pause, and that is a completely valid concern. There are ups and downs in this career, absolutely, and we will not deny that. But you’re the business owner, and just because your monthly income may ride bit of a roller-coaster doesn’t mean your daily heart rate has to.
After you’ve established what your monthly expenses are – your rent/mortgage, food, gas, phone bill, utilities, and so on – add on how much you need to save every month in order to have a buffer. We recommend setting aside at least three months’ worth of saving in order to cover those necessary expenses, six months, if you can do it, is even better. (Note: This is recommended by financial experts even if you are employed.) This is not money for a pair of shoes that just went on sale that you have to have. This is money you do not touch unless you haven’t earned enough to cover your monthly expenses. If you need to dip into this account, fill it back up the next time your monthly income is exceeding your expenses.
Budget in health care
In some parts of the world, you may have to cover your own medical costs. Do research regarding where you live to find a health care plan that covers your needs. Then add those costs to your monthly expenses. In places like the U.S., if you end up having a high-deductible plan, you may be able to take advantage of services like the Health Savings Account, where you can put away pre-taxed dollars to cover out-of-pocket medical costs, including deductibles.
Budget in your retirement savings
Once you have your buffer in place and your health insurance squared away, it’s time to tackle your retirement savings. In places where retirement is funded by the individual, there are sometimes programs that can help you increase that bank account. In the U.S., there are programs such as S.E.P.-IRA, Solo 401(k), and Roth I.R.A. accounts that can assist you in setting aside money for your golden years.
Budget in your vacation
Decide how much time you would like to take off, calculate your earnings for that time and spread that out over 12 months. Add in that cost to your monthly expenses, set up a vacation-time savings account, and pay yourself paid time off. And guess what? You decide how much time you take off every year. How cool is that!?
You’re the boss
And there are advantages and disadvantages with that. On the positive side, because you’re the boss of a job that allows you to decide how much you want to work, after looking over your expenses and taking our Complete Scoping Course, you have the ability to earn what is needed to cover your costs and decide when you will work to meet those costs. There is incredible freedom and power in that.
That being said, there is no payroll department deducting these costs and putting them into accounts for you. You have to have the discipline to do that for yourself. And, yes, it takes a lot of self-control to set that money aside and be wise with it. Remember, you are paying your future self, whether it’s to have a month off to travel Southeast Asia or to set up your 55-year-old self to retire early, whatever your dream is, you are worth the planning and sacrifice it takes now to reach those dreams. And now, with your new freelance career, you have more power than ever to make those dreams come true.
Start Module 1 of the Complete Scoping Course for free today to take your first step into freedom.