It can sound like a great idea to be a freelancer or contractor. There’s always that goal that people have of being their own boss. However, along with that freedom, there’s also an additional set of financial responsibilities that you need to look into – especially if you’re looking for consistency, you have to prepare yourself to work hard at maintaining a workflow.
Before you dive into the world of freelance contracting, be sure to think about a few of the things that might cause you money concerns. For example, what are you going to do about health insurance? Also, if you’re trying to get consistent income, will your opportunities always be present? As a contractor, the risks of competition go up and down pending on your industry. And, you need to be responsible when it comes to creating a savings account for yourself, as putting money in a retirement fund is not automatic as a contractor.
When you work for an employer, you usually have certain health insurance options. When you are working as a freelancer or contractor, your options are going to be much different. Trying to get healthcare without being under the umbrella of an employer will require you to look at a different set of details then you might be familiar with. Information is not as easy to come by either, so plan on doing your research.
Consistency With Income
When you start looking for passive income opportunities, you’ll find a million examples of things that you can do to earn extra cash. The trouble is that not all of these methods are consistent. You can have extreme variations in income possibilities from week to week or even from day-to-day. To develop consistent income as a freelancer or contractor, you have to plan for these ups and downs.
The Risks of Competition
With freelancing and contracting, you also have to look out for competition. For example, if you’re very good at writing freelance articles, then you might feel like you haven’t made as far as consistent income goes. However, what happens when someone is willing to do the same work that you do, but charge much less? Competition is brutal in the freelance market, so you have to make sure that the quality of your output is so good that it prevents other people from infringing on your professional territory.
Being Responsible With Savings Accounts
Finally, at a typical job, some percentage of your money will go toward a retirement account or a savings account. However, with contract and freelance work, this automatic process is not in place. That’s why you have to make sure that you’re keeping a percentage of your money out for retirement, savings, or emergency funds. No one is going to create this equation for you, so you have to be exceptionally responsible for creating a separate account.