- I'm a freelancer earning six figures, and I'm pursuing financial independence to give myself options in the future — to work more, less, or at jobs I enjoy without having to worry so much about how much they pay.
- I've taken a few steps to help me reach financial independence sooner: I boosted my income, keep my lifestyle costs low, and save 50% of my income.
- The more money I save, the more of my time I'm able to take back thanks to my safety net.
- Use Blooom to analyze your 401(k) today and see how you can grow your retirement savings »
As a freelancer, it is natural to go through income ups and downs throughout your career. Most freelancers expect less profitable months throughout the years. But preparing for these downturns is critical to long-term financial stability.
If you are starting from scratch as a freelancer, the best place to start is by building up your emergency fund. But after you have a short-term safety net, what's next? For me, I've begun to pursue financial independence as a way to safeguard my future as a freelancer.
Why I'm pursuing FIRE as a freelancer
FIRE, AKA financial independence/retire early, is the base of a growing movement to ditch the traditional career trajectory of 30+ years. The goal is to achieve a measure of financial independence that would allow you to step away from paid work permanently.
As a freelance writer, I'm pursuing FIRE as a way to protect my long-term financial well-being. Although I earn six figures as a freelancer, I worry about the ups and downs in the years to come. Even with my emergency fund in place, I can't help but wonder what would happen if I was unable or unwilling to continue earning a living with my writing in the future.
I set the lofty goal of financial independence so that at some point I will no longer have to worry about swings in my writing income because I'll have a safety net to rely on. Plus, I can devote more time to other pursuits. Personally, I would like to dedicate more time to my current part-time job as a marine biologist.
For any freelancer, I think that building a base of financial stability is critical. Not only can it serve as a backup plan for slow months, but it also allows you to slowly take more control over your time. With that, you could build a better work-life balance knowing that you are in a financially secure position.
Personally, I know it can be difficult to stop continually chasing the next gig. But as I've worked for financial independence, I've built up financial resources along the way. With those financial resources at my disposal, I feel more comfortable striking a healthier work-life balance.
How I'm pursuing FIRE as a freelancer
My plan to pursue FIRE is fairly simple — set aside half my income each year into savings and investment vehicles until I hit FI.
Boosting my income
The first step to saving more was boosting my income. When I graduated from college, I found a job as a biologist. I loved the job, but I was making around $25,000. With that salary, I had a difficult time saving any money at all.
After a few months in that position, I decided to pursue freelance writing as a second career. I was able to turn my writing skills and growing passion for personal finance into a thriving freelance business. Within the year, I was able to double my income. In the years following, I brought in a six-figure income between my writing career and my full-time job as a biologist.
Sticking to an aggressive savings plan
When I first started writing, I had the aggressive goal of saving all of my writing income. At first, this worked out great because I was still living extremely cheaply in a college town. Essentially, I decided to not make any lifestyle changes in order to keep my savings rate at 50%.
Once I got married, we decided to give our lifestyle a modest boost. We bought a house and brought home a puppy — both expenses that I was happy to take on. However, I was able to keep my savings rate high thanks to a few key choices:
- I bought a smaller house with a value well below what we could technically "afford"
- I looked for ways to cut our food costs
- I spent a lot of time writing to boost my income
The combination of keeping our lifestyle modest and commitment to increasing my income has allowed me to keep a high savings rate. Of course, it might be nice to boost our lifestyle even further. But keeping our expenses in check was a top priority for our FIRE goals.
Taking back my time along the way
Although I was thrilled to own a business and bring in an amazing income, the constant grind started to wear on me. After two years of balancing my creative business and dream job as a marine biologist, I knew that something had to change.
Thanks to our decision to pursue FIRE, we've built a robust financial safety net. With that sense of security, I was able to approach my employer about a shift to part-time. Luckily, my employer was willing to accommodate my request to cut my hours in half. Without the sacrifices we've made to save on our journey to FIRE, I don't know that I would have had the courage or financial ability to negotiate this request with my employer.
Since the shift, I've been able to create a better work-life balance. Plus, I'll be able to continue my pursuit of financial independence while building a business I love and spending some time at a job I enjoy.
Personally, I don't see a downside to pursuing FIRE because I can always continue to work if I want to. But the savings will always be there if I need them. As a freelancer, the peace of mind created with this financial safety net is priceless to me.
Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.
Source: Read Full Article