April 10, 2022

Sick of Your Job? - Tips for Going Freelance

Eric Bank
Former Citadel Director of Business Analysis

Many folks nowadays straddle two work worlds. They spend most of their time as employees at their “day jobs” and devote additional hours to freelance jobs. The freelancing platform Upwork found that 56% of those who’ve tried freelancing (about 36% of the U.S. workforce) said they’re likely to continue.

We’ve got five tips for those ready to ditch their day jobs and transition to freelancing. 

1. Don’t Quit Your Day Job Until You’ve Worked Out a Plan

It’s all too easy to rush into freelancing when you dislike your day job. Don’t make the switch until you’ve first worked out a marketing plan that will help minimize the financial disruption. You don’t need a formal, professional program, but you should be able to answer the following questions:

  • What is the demand for the services I will offer?
  • How well will I compete for freelance jobs?
  • How will I find freelance jobs?
  • How much should I charge?
  • How much annual income can I realistically earn?

You may have some of the answers if you’ve already dipped your toe into the freelancing pool. You can seek further advice from other freelancers, mentors, the Small Business Administration, and nonprofit Small Business Development Centers.

2. Work Toward Steady Freelance Income

You should amass enough freelance experience (say, a year’s worth) to know how much you can earn. That experience should also answer all the open questions in your plan. Armed with a year’s results, you should be able to create a budget that assumes you no longer are an employee. Pay close attention to new expenses (i.e., medical, dental, disability, and long-term care insurance) that your employer used to pay. An employed spouse who intends to keep working can make the transition easier by bringing in a steady income and providing employer medical insurance. 

3. Don’t Neglect Your Retirement Savings

If you’re departing from a company where you held a 401(k), roll it over to your IRA or a newly established Solo 401(k). Since you will wear the employer and employee hats for your freelance business, you can contribute up to $61,000 ($67,500 if you’re 50 or older) of your earnings to your Solo 401(k) in 2022. The more you contribute, the larger the tax benefit and the more secure your retirement. Don’t forget to set up and pay your estimated income taxes.

4. Work on Your Skills

Freelancing is serious stuff. You need excellent skills to compete successfully, and you must keep those skills up to date. Consider educational courses, seminars, conferences, and good reference books – anything that helps you grow your value. Seek constructive criticism from your existing clients and apply it without becoming defensive.

5. Mount Your Social Media Campaign

It would be best to establish a presence on LinkedIn, Facebook, Twitter, and the other major social media sites. There, you can discuss your freelance experiences, tout your credentials, and link to your output (i.e., articles, web pages, graphic pieces) and your successes (awards, press mentions, testimonials, etc.). Keep your social media fresh with regular updates and become a follower of the thought leaders you admire. Nurture your network of contacts by frequently exchanging communications, joining industry-relevant associations, and becoming active in your community.

Full-time freelancing works for millions of Americans. It can work for you if you adopt and execute a well-designed plan.

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