Financial Countdown To Freelancing

The anxiety before you make the leap to freelancing can be overwhelming. There were two crucial steps for me when I decided to quit my full-time job. The first was a conversation with my father-in-law, about the big picture. I worried out loud to him that I was making this move just in the era of my life – my mid-30s – when my earnings were supposed to be ramping up to create the cushion for our kids’ education and our retirement.

His response was simple: “You can afford it for a few years,” he said. I don’t know if his advice was based on a big financial calculation, but the sense that I could go back to a full-time job if I needed to made the decision easier. (His emotional support was also really nice).

The second crucial step was making a decision to live below our means. For us, the steps including leaving expensive New York City for State College, Pa., where my husband got a master’s degree. Here are four other areas of your life where, in preparation for going freelance, you can look to cut costs. If you live below your means, you’ll have less financial stress.

  1. Reduce your housing expenses. This is a big step, but for many, a crucial one. Your housing costs are probably your single largest expense. If you’re serious about adopting a freelance lifestyle, you need to ask yourself if a high-rise in Manhattan is really that crucial to your sense of self-worth, or whether a walk-up in Brooklyn or a home in the suburbs will be the foundation for the life you want. The old rule of thumb is that your home should consume no more than 30% of your budget; if you are a freelancer, perhaps that number should be 20%.
  2. Cut your child care costs. A big part of many freelancers’ motivation is spending more time with their families. So this is a crucial area to consider. For me, cobbling together child care with babysitters and nanny shares has been the best route. One red flag here: Don’t believe that you can be a $200kfreelancer without lining up child care. For my first real, serious contract, the editor asked me point blank if I had arranged child care. When I answered in the affirmative, he knew that I was taking the demands of a freelancing seriously. Yes, there are moments when you will multitask, but there are others when you can’t.
  3. Slice the workday expenses. Starbucks coffee. Happy hours. You’ll naturally do less of these; it’s smart to embrace the change and not let some different and expensive perks of working at home take their place … like, say, the expensive lunch out with the accountant down the street who also works at home.
  4. Look to reduce your gym costs. Working at a high-paced job means that you’ve gotten used to thinking of the fancy gym and the personal trainer as necessary parts of your life. Check out the YMCA, or get together with friends who like to walk, bike or run on a regular basis with you. Establish a workout routine that won’t stress your budget.
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