In this article:
- Working and living as a freelancer can give you the opportunity to set your own hours, work wherever you choose, and take pride in working towards something you believe in. However, not everything about freelancing is fun and games.
- Freelancers often live fairly solitary lives as most of their work is done online and without the need for human-to-human interaction.
- They also need to have the discipline to get all their work done while still making time to put that work away and enjoy other parts of life.
- On top of that, freelancers have to learn how to do their own taxes and how to effectively save for retirement on their own.
The grass is always greener. For those of you working 9-to-5 jobs, clocking in every day, and reporting to your boss, the life of a freelancer may seem like a dream. And, in truth, I’ve loved freelancing over the past three years.
But not everything about being a freelancer is the walk in the park that some people, specifically certain social media influencers, make it out to be.
As a freelancer, I’ve had the opportunity to earn money while traveling the world. I set my own hours, work in my pajamas, and take pride in working on things that interest me. It’s been wonderful, for the most part. But, when I first started freelancing, I ran into some unexpected challenges and drawbacks that many people overlook when they make the decision to go the self-employment route.
So, in the interest of helping all of you readers choose the best working arrangement for you, in this article, I’m going to tell you about some of the challenges people don’t mention when they talk about freelancing. And, hopefully, you’ll realize that freelancing isn’t all just sitting by a pool on your laptop.
The Other Side of Being a Freelancer
It Can Be Lonely
One of the main things that I didn’t foresee when I chose to go into freelance writing was how much time I’d be spending alone. I’m a people person. And, when you’re spending six days a week at your laptop typing away furiously, there’s very little time for human-to-human interaction.
Yes, I do get to have video calls with some of my clients and fellow freelancers on occasion, but it’s not a great substitute for the “watercooler” type of social interaction that you get from showing up to work every day. A part of me misses having the opportunity to walk over to one of my colleagues’ desks and strike up a conversation.
And this isn’t exclusive to freelance writing. In fact, I’d say that the vast majority of freelance work out there is fairly solitary in nature. Web development. Graphic design. Writing. Editing. Virtual assistance. Social media consultation.
These are all jobs that don’t involve much human-to-human interaction whatsoever. The internet economy has made it possible to work from anywhere, but it’s also made human-to-human interaction in the workplace less essential and less common.
Self-Discipline Is Essential
Mastering self-discipline is absolutely necessary to living life as a freelancer. And it’s a twofold problem.
First of all, you need to make sure you have the drive and discipline necessary to get up in the morning and put in a solid workday, otherwise, you may find that your freelancer job isn’t paying the bills.
On the other hand, though, you need to make sure that you don’t let your work consume your whole life.
Everyone has days where they don’t feel like working, including freelancers. Without a boss standing over your shoulder or other employees relying on you to do your part, it can be hard to find the motivation to do what you need to do on a rainy Monday morning.
If you’re someone who has trouble motivating yourself, freelancing might not be for you.
If you are a very self-driven person and you decide to go into freelancing, you need to be careful not to let your work become your entire life.
Work-life balance is important no matter what job you have. Sometimes, I’ll look back on a week and realize that I’ve done nothing but sit on my computer and write. And then I wonder why I feel stressed out!
If you want to be a freelancer, you need to schedule times when you’re going to work and times when you’re going to close the laptop and forget about work entirely. Get up in the morning and focus on work for a few hours, but make sure that you’re also making time to hang out with friends, talk to your family, exercise, or whatever it is that makes you happiest.
Income Uncertainty Is Real
When you’re a freelancer, the amount of money you make is directly tied to the amount of work you can find. And, no matter what kind of freelance work you’re doing, there are always going to be times when it’s harder to find work than others.
Being ready to weather income uncertainty is essential to living a comfortable life as a freelancer.
Especially when you’re first starting out and have yet to develop relationships with past clients, there will probably be weeks when it seems like there aren’t any gigs out there for you. And that means that the money won’t be coming in.
Other weeks, you may find that you have more gigs than you even know how to handle and the money will start pouring in.
As a freelancer, you need to learn to save your money for those times when your income is low. You should always have a reserve of cash that you can use to feed yourself and pay your bills when times get tough.
Maybe a client doesn’t pay you. Maybe you were expecting a high-paying gig, but the employer canceled on you at the last minute. Whatever it is, be ready to weather some income uncertainty by building up some savings and living frugally.
You Need to Learn About Taxes, Fast
When I first started freelancing, I didn’t know a thing about taxes. I went to four years of university and got a Bachelor’s degree in accounting, but nobody ever taught me a single thing about filing taxes as an independent contractor.
If you want to start working as a freelancer, one of the best things you can do is to give yourself a crash course in taxes.
First of all, you’d better start keeping a record of every payment that you receive from every single one of your gigs. If you accidentally misreport your income to the IRS, you could end up with some serious problems.
You may also be eligible to write off certain things as business expenses as an independent contractor that would be considered personal expenditures if you were an employee, so you should look into that as well.
I missed out on a ton of tax deductions in my first year of working as a freelancer because I didn’t know that certain things could be considered a business expense. You may be able to write off things like food, transportation, rent, supplies, or accommodation if you work as a freelancer.
It might also be beneficial for you to organize your business as an S-Corporation rather than a sole proprietorship.
Without getting too much into it, organizing as an S-Corp could limit your personal liability and even save you money on income taxes. It’s definitely something worth looking into for all freelancers.
You Need to Take Retirement Into Your Own Hands
When you work at a company that has a 401(k) plan for its employees, saving for retirement is pretty easy. You just agree on a percentage of your paycheck to go into your 401(k) every month and then your employer automatically contributes that amount. Sometimes, the employer will even match the amount that you contribute.
When you’re a freelancer, though, you need to take your retirement savings into your own hands.
As a freelancer, you need to make all contributions to your retirement savings account on your own. And you need to make sure that you’re contributing enough each month to keep on track with your retirement savings plan.
You can start by opening a Roth IRA account, if you don’t already have one, which allows you to contribute up to $6,000 each year of after-tax income and then withdraw that income tax-free once you’re over the age of 59 ½.
Another option is to open a Solo 401(k) which allows you to contribute up to $58,000 (in 2021) and claim your contributions as a business expense to save on taxes. But it will be taxed later when you begin withdrawing from it.
Whichever route you take, building up a solid retirement fund is definitely possible as a freelancer, but it’s a lot more hands-on than if you were working for an employer with a 401(k) plan.
The Bottom Line
I certainly don’t want to discourage anyone from going into freelancing with this article. I just want people who are considering becoming freelancers to be realistic about what it entails. The freedom, flexibility, and pride that come with being a freelancer are definitely some worthwhile perks.