Economy & Jobs
The Truth About Freelancing Full Time
Full-time freelancing sounds like a dream job to many Millennials who hate dealing with commutes, office politics, and staying chained to a desk all day. But before handing in your two-weeks notice, it’s important to take off the rose-colored glasses and be aware of the less glamorous side of freelancing.
Becoming a Freelancer
Erin Millard made the transition to a full-time freelancer when her fiance was relocated for work, and she left her job to move with him. She had an established blog, which helped grow her writing into full-time work. “I also have to say having a large emergency fund made the transition possible,” says Erin. “I never would have fathomed trying to work for myself and start a business while making nothing if I didn’t have a cushion to fall back on.”
Lauren Bowling worked as a freelancer and blogger on the side for two years before taking the leap to full-time freelancing. “I set a goal for myself that I was going to pay off $8,000 of debt in 90 days at the beginning of 2015,” says Lauren, who offers marketing services, consultation, and copywriting for small- to medium-sized businesses. “To do that, I had to ramp up my freelance work, which allowed me to both pay off the debt and start freelancing full time.”
Handling Your Own Benefits Package
But freelancing isn’t always easy. There are aspects to freelancing, such as finding health benefits and calculating your own taxes that can cause some hesitation. But options are available.
Erin, who is under 26 years old, is enrolled in her parents’ health insurance plan, but she has a separate savings fund for dental and optical needs. The young freelancer opened a Roth IRA and uses it as a retirement savings vehicle instead of a traditional 401(k).
Lauren has relied on online resources, such as HealthCare.gov, to handle her benefits. She also made some changes to her budget. “I cut cable, renegotiated my car insurance and switched cell phone providers, so I was able to ‘find money’ in my budget to accommodate my health insurance payment,” says Lauren.
Paying Estimated Quarterly Taxes
Paying the government estimated quarterly taxes is an often-overlooked element of freelancing. Instead of cutting one check by April 15 (or expecting a return), freelancers pay taxes four times throughout the year. “While it’s great to say, ‘I made X dollars this month,’ you always need to account for taxes; not all that money is yours,” laments Erin, who felt the growing pains of running a small business and having to handle every piece of paperwork herself.
Meanwhile, as a new full-time freelancer, Lauren is dealing with trying to balance saving up for quarterly taxes and estimating how much is owed and how much can be written off. “To be honest, I usually cash flow my quarterly tax payments, and just cut back on discretionary spending in the months those are due,” explains Lauren who works alongside an accountant when it comes to tax payments.
Why It’s Worth Being a Freelancer
Despite challenges due to no longer being able to count on a human resources department, both Erin and Lauren agree that being a full-time freelancer is worth it. “Becoming a freelancer has been empowering,” says Erin. “It’s taught me so much about myself, and I’m constantly challenged each day. There are no boring moments.”
Lauren agrees, “After three years of working 60+ hours each week between my full-time job, freelance clients, and blog, it is nice to have more free time to relax and enjoy my favorite things like yoga and time with friends.”