Taking the Leap: How I Prepared My Finances for Self-Employment
As a creative person, I’ve always dreamed of working for myself. Having control over my projects and schedule is essential to my happiness. However, I’m also a risk-averse person who values financial security. To reconcile these conflicting desires, I knew I had to take proactive steps to safeguard my finances before making the leap to self-employment.
Building a Safety Net
Before diving into freelance writing, I built an emergency fund that would cover almost a year of my bare minimum expenses. This was crucial, as I knew my income would be unpredictable at first. Having a substantial safety net has given me peace of mind and allowed me to make decisions based on strategy, rather than fear or desperation.
Planning for Taxes and Retirement
As a self-employed individual, I’m responsible for saving for taxes and retirement. I set aside a percentage of my income each month for these purposes, ensuring I’m prepared for the future. Meeting with an accountant and financial advisor helped me understand my obligations and create a long-term plan.
Setting Income Expectations
To minimize my low cash flow phase, I set an income deadline for myself. This motivated me to secure my first client and forced me to re-evaluate my strategy if things didn’t work out. Having a clear income expectation helped me gain a realistic understanding of what’s required to succeed in my field.
The Benefits of Self-Employment
Becoming self-employed has made me more mindful of my finances. Every dollar I earn is a direct result of my effort, which has changed my relationship with labor and value. I’m constantly looking for ways to work smarter and more efficiently. While it can be scary, this mindset shift has helped me develop better money habits and a deeper understanding of my financial situation.
By taking these steps, I was able to transition into self-employment with confidence and security. If you’re considering making the leap, remember to prioritize your finances and create a solid plan for success.
Leave a Reply