Freelancing gives you more freedom than a standard corporate job. That freedom is exciting. It gives you the flexibility to control your own hours, workload and fees.
But there is also a downside to that freedom — it comes with instability. You won’t have some of the same work protections as corporate employees. Your clients could drag their feet when it comes to paying you what you’re owed. Or worse, your projects could dry up, leaving you wondering how you’ll get by without any income for the foreseeable future.
That’s why you, as a freelancer, should set up these safety nets for yourself. These will protect you during the most unstable moments on the job.
Make Clear Contracts
The first protection that you can set up for yourself is a clear contract. A clear contract with your client will help you determine the important details of your arrangement, such as the workload you’re agreeing to complete, the deadlines for that work and the pay you will receive. To make sure that the client pays you on time, include late penalties in this agreement.
Technically, a contract can’t prevent bad clients from sidestepping the terms and skipping out on payments. However, having a copy of a written and signed agreement will come in handy if you ever need to take them to court over unpaid fees.
Have an Emergency Fund
As a freelancer, your income is unstable. One month, you might be thriving at work and collecting lots of big checks from clients. Another month, you could have no projects to rely on.
How can you pay the bills when the cash flow has stopped? Your best solution is to set aside savings every month to build an emergency fund. When work dries up and you don’t have any paychecks on the horizon, you can turn to your fund for help with paying the bills.
An emergency fund can also help you deal with urgent expenses that are outside of your monthly budget. So, if your car needs repairs, you can use the savings from your fund to pay for them right away.
What can you do when your savings are low? If you have an emergency expense and you don’t have enough in your fund to cover it, you could try applying for a loan or line of credit. Click here to find out about your possible borrowing options to help with emergency expenses. You just might be able to borrow the funds that you need to tackle the problem as soon as possible.
Most people get their health insurance through their employers. That option is obviously not available to self-employed workers.
However, as a freelancer, you should make a concerted effort to apply for private health insurance coverage to guarantee that you have a financial safety net when you get sick or injured.
Medical bills in this country are incredibly steep. In fact, one of the biggest causes for Americans to file for bankruptcy is medical issues. The combination of expensive bills and loss of income from time off work can put you in a very precarious situation — especially when you have no health insurance whatsoever.
You don’t have many set protections as a freelancer. So, you’re going to have to put together these safety nets to protect yourself.