Working for Yourself: The Good and Bad

This month I’m celebrating three years of being self-employed and, to be honest, that’s actually shocking to type considering how fast time has gone by. These days I can’t imagine driving an hour to work, dealing with pissy customers, or putting on a suit every day. But, while I’ve certainly enjoyed the last three years and am more or less elated with the career I’ve built so far, being a freelancer is not without its downfalls.

Before I get into some of the headaches that come with working for yourself, let me first affirm some of the benefits:

The Good

No Commute

Let me tell you about my commute to work each day: I wake up, climb out of bed, walk about a dozen paces, and plop down at my desk chair in the next room. This is a far cry from the hour-long (on a good day) commutes I had previously and makes me wonder how I ever put up with such things. Needless to say, the lack of commute I have working from home is a major perk to me.

When you think about it, commuting can be extremely draining both monetarily and physically. For one, it’s time you’re not getting paid for. So, in situations like in Los Angeles where it might take me two hours to get home, I was just extending my day needlessly. In fact, that commute was actually costing me money as it would require gasoline — not to mention additional maintenance to keep my vehicle in working order. Incidentally, once I did get a job working from home, my wife and I actually sold one of our cars, leading to even more savings. 

Ability to Travel

Ever since my wife and I got married and had our (delayed) honeymoon in Tokyo, Japan, we’ve realized just how much we enjoy traveling together. This not only includes our big international trips to Shanghai, Hong Kong, and Paris but also road trips to California, Ohio, and New Jersey that we’ve successfully taken as a couple. But what sucks about traveling in our case isn’t the stress of flying, the perils of driving across the country, or even the costs per se — it’s the struggle my wife goes through to get time off. Meanwhile, I can take my work pretty much anywhere with WiFi.

To say that my wife is jealous of my ability to rearrange my work schedule and travel without missing a beat would be an understatement. As a result, she’s been looking for something she can do from anywhere as well, allowing us to travel more and perhaps even become digital nomads one day. Even if you don’t have aspirations to see the world or do business from the beach, just having the option to keep up with work while away and actually make money while on vacation is certainly appealing to me.

Explore Your Interests

How many people in this country do you suppose are doing something they really love? Sure, there will always be frustrating times in any career you choose, but there’s a big difference between the occasional occupational annoyance and straight up hating your job. Unfortunately, it’s not always easy to leave your humdrum gig and find something better. That’s where starting a side hustle and creating that dream job for yourself comes in.

Whether you want to create and sell products, blog about a passion of yours, write and publish books, or just about anything else, there are now plenty of platforms and resources online to help you get started. For example, services like Wix and Squarespace have made it much easier to create a great-looking website and open up an e-commerce store (a major jump up from the days of Geocities, that’s for sure). Similarly, social media makes it possible to connect with people like never before, allowing you to build a team, find followers, and create customers. As corny as it may sound, now the only thing standing between you and your dream job is your imagination and your drive.

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Another thing that should be noted is that it may not be necessary to go from 0 to 100 with your business idea overnight. This is to say that, in many cases, you can set up your next act while still holding onto your day job. For some people, this plan of attack will only hold them back but, for others, the steady income could be just what they need to turn their side hustle into a full-time gig.

The Bad

Irregular Income

Speaking of steady income, once you leave the security of nine to five and decide to work for yourself, your cash flow could change dramatically. Beyond the fact that you’ll be solely responsible for making sales or bagging clients in order to make a living, there are plenty quirks that come with freelancing or being self-employed. From clients who take forever to pay up to the seemingly eternal escrow PayPal can sometimes place your money into, there’s plenty of reasons to have a financial Plan B when you’re working for yourself.

Thankfully, there are a few ways you can help smooth out your finances and prepare for the leaner times. At the top of the list is simply living below your means and growing your savings. While everyone should have an emergency fund and a rainy day fund on top of that, freelancers and entrepreneurs should really have a third fund they can tap when they’re waiting on their income. Note that these savings should also be separate from any retirement accounts you may have (which you should absolutely still contribute to) as you’ll need your money to be liquid just in case you have a cash emergency.

If you don’t already have a budget, you’ll definitely want to make one before going into business for yourself. This will help you assess what essential bills you’ll need to cover each month and where you can cut back. To help with these, I’d recommend trying an app like Mint, although there’s some real value in drawing up your budget the old fashioned way first: totaling up your expanses, categorizing your spending, and setting limits for yourself. Remember: when you’re self-employed, your business finances will literally depend on your personal finance skills.

Self-Employed Taxes

Most people probably already hate dealing with their taxes. That’s why you surely won’t be excited to hear that taxes only get more complicated when you run a business or become self-employed. Once that happens, you get the pleasure of paying taxes four times a year — lucky you! Furthermore, likely thanks in part the growing popularity of the gig economy, the number of people who have been penalized for underpaying their estimated quarterly taxes has risen by 40% in the past five years. Yes, quarterly taxes are annoying, but those too are being made easier by technology.

As I alluded to, the taxes you pay quarterly are actually based on estimates of your income. So to recap, in addition to having irregular income as a self-employed individual, you’ll then have to estimate that irregular income in order to send some cash to Uncle Sam every few months (just wait — it gets better). On top of that, if you don’t end up paying enough by the time April comes around, you could also be hit with a penalty. Luckily, if your payments total at least 90% of what you should have paid or are at least equal to what you owed the year before, you’re good. Still, you can see how confusing these estimated taxes can be.

That’s why, about a year and a half ago now, I decided to give Quickbooks Self-Employed a try and I’d definitely recommend it. Beyond the helpful tax element, the app and site also make it easy to track your business expenses and mileage, which are likely to lower your tax obligations overall. You can actually read my full review of Quickbooks on Dyer News but, in short, it really has helped me deal with my quarterly taxes.

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Time Management Tips

Are you easily distracted? Impulsive? Just damn lazy? Yeah… you’ll need to change that before becoming self-employed because, once you become your own boss, you’ll be the only thing pushing yourself to be productive. Sure, in some cases there may be clients or customers nagging you to get things done, but time management and self-motivation are still a critical aspect of working for yourself.

There’s a lot of advice that people offer about improving your time management skill and, in turn, your productivity such as building a routine and creating a checklist for your day. Additionally, I’ve seen tips that suggest that getting dressed like your going to work (even if, like me, you’re just walking to the next room) will help you stay focused.

That may all be true, but let me just tell you what works for me. First, I never cease to be amazed at the power of waking up early. I actually used to force myself to get up super early as a form of punishment for not getting my work done (admittedly, I still do from time to time), but now I’ve actually taken to just waking up a bit earlier on a daily basis. This gives me more time to ease into my day, enjoy some tea, and get a head start on my work, leading to less stress overall.

Next, I have can’t tell you how important having deadlines is. Quite honestly, if I didn’t have deadlines, I would probably never get anything done. Of course, once I meet these goals, I’m always sure to reward myself in some way, which usually just means watching that YouTube video I’d been putting off for hours.

When it comes to time management, staying motivated, keeping focused, and being productive, there’s really no one-size-fits-all solution. Thus, you’ll want to experiment with different methods and see what works for you. And, if nothing else, keeping the threat of having to go back to your dreaded day job in the back of your mind just might do the trick!

I love being self-employed; my lack of commute, ability to travel, and the fact that I get to do something I enjoy make it all worthwhile. That said, the irregular income, the pain of estimated quarterly taxes, and the struggle to keep myself on task are certainly downsides that need to be considered. Still, these past three years of freelancing have been amazing and I can’t imagine doing anything else — hopefully you’ll feel the same way.

This article by Kyle Burbank first appeared on Money@30 and was distributed by the Personal Finance Syndication Network.

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