I’m genuinely excited about moving into self-employment and exploring freelancing full-time. A few weeks ago I published a post about choosing between passion and stable income, and the comments I received sparked a lot of reflection.
Now that I’ve committed to this path, I need a concrete plan—and I need to write it down so it won’t get lost in the day-to-day.
Some might think switching to self-employment is naive. I’ve considered the risks and rewards carefully and feel ready to take the next step. Working for yourself isn’t all freedom and sunny days; it has real challenges, and it doesn’t suit everyone. Some people regret the change, while many others are thrilled they made it. There are pros and cons to both working for yourself and working for someone else.
For me, the benefits of self-employment outweigh the drawbacks, but I want to prepare thoroughly.
Increase savings
Boosting our savings is my top priority. Before I leave a steady paycheck, I want a healthy financial cushion in case a month—or several months—bring much lower income than expected. I also plan to reduce or eliminate high-interest debt; if a loan has 0% interest, prioritizing savings can make more sense than paying it off early.
Fortunately, our current income is strong and our expenses are relatively low, which makes building a substantial emergency fund feasible.
Create a new budget
With me self-employed and W earning mainly commission, our monthly income will likely fluctuate more than it has in the past. That means we need a revised budget that accounts for variable earnings and still lets us meet our goals. We intend to continue living on a fraction of our income so we won’t feel immediate pressure from irregular paychecks.
The aim is to avoid feeling like we’re struggling simply because our income isn’t predictable.
Build your freelancing NOW
It’s wise to grow your freelance business before quitting a full-time job whenever possible. I’m working toward a concrete monthly income goal from freelancing and prefer to reach that target before making the leap. Building clients and reliable revenue streams beforehand increases the chance of long-term success and reduces stress when you finally transition.
Health insurance
Health insurance can be a significant expense for the self-employed. Luckily, I’ll be able to join W’s plan after we marry. If you must buy your own coverage, options vary widely: you can choose a low-premium plan with high out-of-pocket costs or a more comprehensive, pricier plan with lower copays. Given my age and general good health, I’d likely opt for a lower monthly premium and set aside a dedicated medical fund to cover copays and unexpected bills.
Various expenses
My work doesn’t require costly equipment—mainly a reliable computer—but my current machine is slowing down, and I need better hardware before I depend solely on freelance income. I’d also like to set up a dedicated home office. Right now I work wherever I can, but a proper workspace will improve efficiency and professionalism.
Diversify your work
Diversifying income streams is a priority for me. If one source slows, others can keep cash flowing. I’m continually adding side hustles; recently I started offering blog management services as another revenue stream. Much of my work involves blogs, so I’m also exploring adjacent areas to expand my offerings. What do you do for work?
Taxes – Don’t forget about these!
Yes, I pay taxes. Self-employment taxes are different from payroll taxes at an employer, and they can feel hefty. Typically you pay quarterly estimated taxes, so it’s important to factor these into your budget and to estimate on the higher side to avoid surprises. Given the complexity, many freelancers set aside a percentage of each payment specifically for taxes.
Loans will be harder to get approved for
We’re house hunting and plan to buy before I switch to full-time self-employment. Lenders tend to prefer at least two years of self-employed income on record, so getting a mortgage after becoming self-employed can be more complicated and may result in higher interest rates. Buying now will likely make the mortgage process smoother and help us secure better loan terms.