“What am I going to do if this doesn’t work?” The first few months of freelancing full-time, that question was always in the back of my mind. I wondered what would happen if I couldn’t make it as a freelance writer. Looking back, I can’t believe I ever doubted, but even if I had to do it all over again, I’d still keep a backup plan.
When I say backup plan, I mean the thing you’ll fall back on if something – temporary or permanent – happens to your freelance income or if you incur a big expense that can’t be covered out of your regular monthly income.
Emergency Fund or Savings
I believe an emergency fund is the safest way to cover yourself. Right now, I have about one month of living expenses in my emergency fund. My goal is to get it up to six months. I know I can use this money my income if it all shorts one month, or for emergency car repairs. Sometimes you can predict and prepare for big expenses, e.g. annual property taxes. But, when things come up unexpectedly, the emergency fund is a good place to go. I treat this emergency money as if I’d be somehow penalized for withdrawing it. I won’t, but I avoid using it unless the situation is dire.
Using a credit card or loan is an option for floating yourself for a month. Borrowing money to make ends meet because is risky because it will be hard to pay it back when your income does recover. If you can help it, avoid being in the situation where you’re charging groceries. It’s one thing to charge them until the end of the month when you know there’s a check in the mail. It’s another thing to charge everyday items without any firm idea of future income. If that’s the case, you may need to rethink your freelance writing career.
Going Back to Work
I used to keep my resume very fresh so I’d be able to jump right into the job market if it was ever necessary. So far, that hasn’t had to happen, but it’s always been in the back of my mind as a very last resort. Because I never want to "go back to work," I'm more determined to be successful at freelancing.
Do You Need a Backup Plan?
It's make it without a backup plan, but that doesn’t mean that skipping this step is a good idea. It makes more financial sense to have something to fall back on in hard times. Even if you don't have money in savings or access to a credit card, at least have an idea of what you'd do if a payment doesn't come through this month or if your biggest client cancels their work. Every once in awhile, I still ask myself that question, “What am I going to do if this doesn’t work?” What's your answer?