We know that freelancing is a great gig. Flexible hours, being your own boss, more creative freedom… for many professionals, freelancing is the kind of fulfilling work every adult hopes to do. It’s only natural that the freelancing world and ‘gig economy’ is booming right now. In April 2018, around 3.4 million Americans gave their two-week notice to their job, many of them in pursuit of freelancing opportunities. What a lot of new freelance hopefuls don’t realize is how quickly a blossoming freelance gig can be knocked down by finances and poor choices. Here are a few situations that have ruined freelance careers in the past.
Depending on your field, you may have established a local frequent customer base. Guess what? When you move away, that customer base disappears and you have to virtually start over. If you’re a freelancer who works almost exclusively remotely, this will be less of an issue. But the act itself of moving is also more expensive and time consuming than some inexperienced movers realize. Moving within your state can cost around $2,300, while moving out of state can cost a whopping estimate of $4,300. If you’re a freelancer living on a strict budget, the influx of costs and lack of time to accomplish projects for clients will test your patience.
You Get In Trouble With The Law
No, not necessarily something huge like gun running or gang violence. Even run-of-the-mill offenses like drug possession, harassment, and DUIs can financially cripple you and put a stain on your reputation. For example, a DUI conviction can leave you paying off a $20,000 or higher bill, including fines and lawyer fees. Of course, if you’re trying to build a good personal reputation, a mark on your public criminal record could also drive away potential customers.
You Don’t Budget For The Lifestyle
It sounds almost obvious: budget for the lifestyle. Yet many a freelancer has had to quit their independent hustle for a ‘stable’ paid gig because of poor planning. Whether you aim to freelance full-time or on the side, the money is inconsistent. The income from freelancing changes month to month depending on what projects you take and how prompt your clients are with payment. If you overestimate your spending limit instead of making conservative guesses while you’re budgeting, you’ll be in financial trouble very quickly. What if there’s an emergency and you’re one of the 3% of urgent care patients diverted to the ER? Those medical bills are no joke and require serious financial planning. Similarly, if you under-charge your clients or are too picky with new projects, you’ll run into money troubles. Use tools like the ‘what is my day rate’ calculator and budget management templates to keep on top of your income and spending without nasty surprises.
These are just a few examples of financial pitfalls freelancers could encounter. Plan ahead, make smart choices, and you’ll avoid the worst of it. Don’t forget to ask your fellow freelancers about how they got out of tricky situations in the past!