By Erin Boeck Motum
So, it’s finally happened. At the grand old age of 30-something, I’ve started to turn into my parents. It was bound to happen, especially once I had kids. It began with small things, like me telling my twin daughters, “Because I said so!” when they asked why they had to do something (for the billionth time). Over the years, I’ve found myself empathising with my parents more and more, finally getting why they said (and did) what they did. And now, here I am saying yet another common phrase from my parents: Pay yourself first.
You see, my dad always said this to me, but he was mostly talking about setting aside money from each company paycheck for your pension and savings. But, when you’re a freelancer, that phrase comes to mean so much more.
Setting your hourly rate (or project rate) can feel very much like a measure of not just what your skills are worth or what your time is worth but what you’re worth as a person. If you ever have a conversation with me about the importance of work-life balance, you’ll probably hear me go off on a mini-rant about how some companies treat their employees as if they were disposable. You’ll also hear me argue that companies should treat their employees as their most important and valuable resource — and yet, as freelancers, many times we fail to do this for ourselves.
Yes, when you set your rate, you have to factor in your overheads (office space, computers, programs), any tax expenses, and your time itself, but you really should also make sure you’re factoring in the various benefits that you would (and should) get in a company. What would happen to you if you didn’t have as much work coming in or if you got hurt? How are you getting camaraderie and support when you’re not part of a company?
To make sure that you’re taken care of, don’t forget to think about sick pay, pensions, holidays, random treats, training courses, and social interaction. All of these things are incredibly important when it comes to making sure you’re as happy, healthy, and productive as possible.
After all of these years, I’ve come to associate “Pay yourself first” with the importance of determining your worth, knowing it, and defending it. Setting yourself up in the freelance world can involve some big sacrifices, but it should never be something that chips away at your value. If you’re looking for ways to make sure you’re the kind of boss you wish you always had, I’ve included some information and links below. Until next time!
Set Your Hourly Rate
Don’t just pick a number from the sky. In addition to researching average rates in the area where you live (and where your client is based, if that’s different), you’ll want to have a full list of what it costs you to work (including any office rentals, computers, software, taxes, health costs, and so on) and what you need to survive (housing, food, transport, and so on). Once you’ve worked out the lowest amount you need earn just to ensure that you don’t end up going into debt for the pleasure of freelancing, you can work from there to set an amount that you (and your clients) feel comfortable with.
Research Pensions (Rentenversicherung) and Other Types of Insurance
A friend of mine recently got into a major accident, which made me think BIG TIME about how important it is to have insurance and a back-up plan. Just because you’re a freelancer doesn’t mean you should lose out on investments in your future retirement plans or the safety net that comes with life insurance, income benefit protection, and critical illness cover. It can be all too easy to forget to set one up (or to skip a pension payment when you’re a bit low on cash), so make sure you set up an automatic payment system of some kind.
Find the Perks of the Job
Although unreliable workflows and variable interest levels from clients can be stressful, freelancing can give you the flexibility in your schedule that a lot of “normal” employers just don’t offer. (I’m looking at you, America.) But that’s not where the freelancing benefits should end. Just because you’re a lone worker doesn’t mean you should have to be lonely. Make plans to attend networking or industry events (and keep an eye on Clustered’s weekly newsletter so you’ll never miss an opportunity to get out and connect with others who can help you). Budget for little pick-me-ups like ice creams on hot days or a special dinner to celebrate finishing big projects. And don’t forget to have a bank of ideas of things to do when things are slow; those downtime periods hold a lot of potential for you to rest, recharge, learn, and grow.
I hope you’ve found that all helpful. I know that taking care of yourself can feel like yet another thing on your already too-long list, but having these things in place will create the strong foundation you need to flourish as a freelancer.