I’m really excited about the idea of self-employment and freelancing. A couple of weeks ago, I wrote about choosing between doing what I love and having a stable income. The feedback I received got me thinking even more.
Now that I’ve decided to go for it, I need a solid plan. If I don’t write it down, I’ll forget it. Some people might think I’m naive for wanting to make this switch, but trust me, I’ve thought it through. I’m ready for this next step in my life.
I know working for yourself isn’t all fun and games. It doesn’t work out for everyone, and some people regret the decision. But others absolutely love it. There are pros and cons to both self-employment and traditional jobs.
For me, the positives of working for myself outweigh the negatives. I want to be as prepared as possible.
**Increase Savings**
This is my top priority. We need to boost our savings before I make the switch, just in case we have a bad month income-wise. I’d also like to minimize or eliminate any high-interest debt. Right now, our income is high, and our expenses are low, which is great.
**Create a New Budget**
With me being self-employed and W mostly on commission, we need a new budget. Our monthly income will likely vary, so we have to plan for that. We want to keep living on less than half of our income to avoid financial stress.
**Build Your Freelancing Now**
It’s crucial to build up your freelancing work before leaving your day job. This might not work for everyone, but it’s my approach. I have a target income in mind that I want to reach before making the switch. I need to build up my client base to feel confident about going solo.
**Health Insurance**
Health insurance will be expensive, but I can join W’s plan once we’re married. Health insurance options vary widely. Since I’m young and rarely visit the doctor, I’ll probably go for a cheaper plan and save money for any medical fees in a separate fund.
**Various Expenses**
Fortunately, I don’t need a lot of expensive equipment for my workâjust a good computer. But I do need to upgrade my current slow computer before making the switch. I also want to set up a proper office space instead of working wherever.
**Diversify Your Work**
This might not apply to everyone, but I want to diversify my work. This way, if one job slows down, I have other income sources to rely on. I’m constantly adding new side hustles, like blog management, to my list. Since most of my work is blog-related, I’m also exploring other areas to expand into.
**Taxes**
Yes, I am paying taxes. I should probably write a post about self-employment taxes because many people have questions. I’m new to paying these taxes outside of my office job, as I just started my side hustles last year. It’s not fun, but it has to be done. Taxes are paid quarterly and can be expensive, so they need to be included in our budget to avoid surprises.
**Loans Will Be Harder to Get Approved For**
We’re looking for a new house and plan to buy before I make the switch since I don’t have two full years of self-employment records. I don’t want to switch and then struggle to get a home loan. It’s possible to get a home with unstable income, but I’d prefer the process to be as smooth as possible, just like the first time we bought a house.
What else should I consider for those thinking about making the switch? Would you ever go for self-employment?