Are You Ready to Make the Leap? (Part 5)

If you’re still not sure you’re ready to jump into freelancing full-time, never fear. I’ve shared four signs that you might be ready to make the leap, but there are still two more to go.

But first, let’s review the first four, in case you missed them:

1. You’re restless.

2. You’re looking for flexibility.

3. You have the right personality.

4. You have steady work.

Now, for the fifth sign:

5. You have a financial cushion. There are no hard-and-fast rules that tell you exactly how much cash you should have saved before you quit your day job. Some people recommend a month’s worth of living expenses, some three, some six. My advice: The more you have saved, the better. Bills typically come in a lot more quickly than checks, and even if you have work lined up ahead of time, it can take a while to build up your business to the point where you can cover all of your expenses. That cushion makes a difference—really.

In an ideal world, I would have saved more money—a lot more—before I quit. But the timing made sense for me for other reasons. So I didn’t spend as much time saving as I should have.

If at all possible, save more than you think you’ll need. You’ll be glad you did.

Remember, too, that there may be additional expenses you didn’t have to worry about before. Setting up to freelance from home is a relatively low-cost endeavor—as long as you have a phone, a computer, a printer, and an Internet connection, you can get going. But you may decide to spend the money on a professionally done portfolio website. You might want to print business cards. You’ll have to pay for basic supplies like paper, ink cartridges, and pens that you might not have used as much of before. All of those little expenses add up.

And don’t forget about health insurance. Perhaps you are covered under your spouse’s plan and don’t have to worry about it. But many freelancers forget that once you cut the cord from that full-time job, you’re on your own for health insurance, retirement savings, disability insurance, and whatever else you might have had for benefits before. When you’re calculating your monthly expenses (and you should, stat), be sure to take those additional costs into account. Then, and only then, you can get a clear idea of whether you can make the freelancing life work financially.

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