A couple of months ago, I published a post on Making Sense of Cents about How To Prepare for Self-Employment. I am planning on making the switch relatively soon, and I wanted to publish an update to that post.
There are many things that I have done and that I need to do in order to make the switch to self-employment as smooth as possible:
Increase our savings
We are really working on increasing our emergency fund. We depleted a lot of it in order to pay off my student loans. We want to have around one full year of expenses before I make the freelancing switch.
Luckily our budget is kind of low. Everything altogether (but before saving for retirement) is around $3,000 each month.
Think of a backup plan
Self-employment and freelancing is a dream of mine, and I would really prefer it to never end. However, we have to be realistic. What if something medical came up? What if freelancing really went down hill and we use up all of our emergency fund?
I really want to keep my resume up-to-date as much as I can. I want to keep my skills up-to-date as well. I really do have high hopes for my freelancing, and I am hoping that I will be successful with it for years to come.
Build my freelance services
Yes, I said empire, mainly just to be funny! I am working on increasing the number of services that I offer, and I am also working on increasing the amount of clients that I have. Yes, I will be tired up until the day that I make the switch, but it will all be worth it.
I have been much better with streamlining my tasks and making everything work. Working my day job and freelancing have been much better lately.
Health insurance is tricky. Until W and I get married, I’m just going to have to suck it up and pay the high cost for health insurance. I am still undecided if I should pay for a cheaper plan that is mainly for “catastrophic” medical cases, or if I should get a more expensive plan.
I am healthy and hardly ever go to the doctor, but you never know what may happen.
There are a lot of relatively little things that I need to plan as well. I would like to set up a home office so that I am not just working anywhere and everywhere in the house. I would like to be more organized and have a place that I can really concentrate.
Right now, my various offices are on the couch in front of a TV…
Taxes have of course been thought about and have been paid so far. I’m still looking into various ways to be smart with taxes and I will be consulting with more accountants soon. Paying 30% to 40% in taxes makes me cringe, but it has to be done.
It will be harder to get approved for financing
This is something that everyone keeps telling us. Yes, I know! We are putting our home-buying on hold since we haven’t found anything that we like yet.
What else should someone do who is preparing for self-employment?