How to Be a Freelancer and Not End Up Homeless

Freelancing isn’t for everyone. If you’re dying to start a real business–meaning one with employees, products, and investors and a big-money exit strategy, freelancing is going to seem second best.

On the other hand, unlike businesses, freelancing has a very low start-up cost, gives you maximum control over your life, has the same (or better) tax breaks, and is far less time consuming than trying to be a full-on entrepreneur.

Freelancing isn’t the same contracting. A contractor is an employee who doesn’t get any benefits. If the company falters, you’re the first to go. And most of the time it involves the hassle of being a regular employee (like commuting to an open plan office–ugh.)

Unlike contractors, freelancers have (or should have) multiple clients. They still don’t get employee benefits but they have far more control over their lives and who they work for than mere contractors. iI one of your clients goes away, it isn’t a huge disaster. Freelancing is the only job security that exists in today’s world. And freelancers get to work from home. (If you have to commute to a workplace, you’re a contractor not a freelancer.)

I’ve been freelancing for about two decades. Every year (except the first three), I’ve made at least twice my age–far more than I would have made in a regular day job. While I haven’t gotten filthy rich, I’ve made enough to be comfortable. I’ve also been able to work from home and have had time to pursue many other interests. It’s been sweet, actually.

Even so, those first three years were pretty scary. Though I was eventually successful, I’ve known many people who have tried freelancing but couldn’t hack it, even though they’re smarter and more talented than me. Most of them failed in the first year, hence this post.

Looked at one way, this is the best time in history to go freelance. The Internet connects people, it opens up a myriad ways to market your services that weren’t available even a decade ago. In addition, you can use the Web for online meetings, preparing invoices, accepting payments, and so forth, thereby greatly cutting down on paperwork and hassle.

Seen another way, though, this is the worst time in history to go freelance. The huge online marketplace has created a price war where skills that once would have commanded big money are sold for, well, five dollars a pop. (See

In this column, I’ll explain how I became and have remained successful as a freelancer. It’s advice I’ve given to others–clients mostly–but I’ve never really written about in detail. Pieces maybe, but not the entire process. I could probably write a whole book on this subject, but I’ll cut to the gist:

1. Reduce expenditures to the bare minimum.

When I first thought of writing this post, I considered making it the world’s shortest post by simply writing “move into your parent’s basement.” That’s obviously not always practical but the principle is valid: get those expenses down. Way down.

During the first year or two of freelancing, you’re probably not going to make nearly as much money as you did when you worked for somebody else. (The one exception to that is if your current employer becomes your first client… but then you’re really just a contractor.)

So if you’re serious about freelancing, you’ll likely experience negative cash flow, so you’d best ensure that the negative is as small as possible. 

Go through every expense and figure out how to reduce it. Cut back on your phone service and usage. Buy in bulk the stuff you consume regularly. Use the public library and any other free services in your community. Sell the fancy car and get a “transportation vehicle.”

Once you’re successful, you can go back to the luxuries, if you want. For now, though, you won’t become successful if you can’t survive the first couple of years… and if you’re hemorrhaging money you’ll likely be too distracted to function effectively.

2. Accumulate a financial cushion.

Since your income will be temporarily lower, you’ll want some cushion. Fortunately, unlike starting a business, going freelance doesn’t require you to spend all your money and credit just to get up and running.

Needless to say, reducing your expenditures helps you accumulate your cushion. In my case, I put aside about six months of living expenses. I also banked my vacation days and negotiated for a severance, which came out to 13 weeks of income at my day-job level on the day I quit.

While I’m on the subject of finances, freelancers get a lot of cool tax breaks. What’s more, you’re allowed to lose money two years out of five (I think), which means you can probably get your taxes down to pretty much zip for the first two years.

3. List all the ways you can make money.

One of the biggest obstacles to being successful at freelancing is worrying whether you can make enough money to survive. That’s especially true if you’re accustomed to a regular paycheck.

I found it useful and encouraging to write down all the different ways I could make money, both inside and outside of my field. For example, I owned a fair amount of valuable books that I really didn’t want; I knew I could sell them if I had to. (I eventually did for a cool $4,000.)

During this process, it also occurred to me that I could get a roommate, since (being recently divorced) I had a lot of extra space in the house where I was living. I immediately advertised and got a roommate, which provided a little extra income for the next four years or so.

One warning: when you’re thinking of ways to make money, the one idea that you MUST not entertain is going back to work for somebody else. This will be a major temptation because as soon as you go freelance (intentionally and 100% committed to be successful at it) suddenly everybody wants to hire you. I’d say about a third of freelancers fail because they accepted a job.

4. Define how you’re unique.

As I mentioned above, the Internet tends to turn freelancers into commodities. That’s why I recommend that you avoid sites like Fiverr and Upwork. Ideally, you want to position yourself as something so unique that it wouldn’t fit within those sites’ structure and then market yourself directly.

For example, if I were launching myself as a freelance writer of marketing copy, I would limit myself to a specific industry and describe myself as the only person who specializes in writing marketing copy for that industry. The last thing I’d do is offer my services in concert with a hundred other freelancers and end up taking the lowest amount.

5. Get yourself totally pumped.

Regular workplace have many incentives: the regular paycheck, peer pressure, comradery, boss-fear, etc. Well, guess what? When you’re freelancing there’s none of any of that and so you will need to become 100% self-motivated.

This is, in fact, probably the hardest part in the beginning, especially if you’re not used to be alone for long periods of time. When I was in early days, I got into Tony Robbins, but he’s not everyone’s cup of tea.

Regardless of what self-motivation method you use, make it an everyday thing. The more regularly you “pump yourself up,” the more it builds your emotional muscle and momentum. Take this stuff seriously because without it, you will fail.

6. Quit your day job.

You’ve laid the groundwork, now just do it.

7. Market yourself full-time (at first).

Being a freelancer means means doing your own marketing. Don’t bother complaining about it. Marketing and sales aren’t not just part of the job… in the beginning, they’re 100% of the job.

As you build your practice, you’ll spend less time marketing and more time doing work of clients. Eventually, your clients will bring in repeat business or refer you to new clients. Also, you’ll get so good at marketing that you can spend a lot less time doing it.

Here’s a map of the workload for a successful freelancer:

Spending 100% of your time marketing means exactly that. For the first few months,  you should be spending 6-8 hours a day marketing yourself–social media, networking, calling old contacts, writing proposals, honing your sales skills, etc.

If you’re thinking “but I don’t want to market and sell my service,” don’t bother trying to freelance because you’ll fail. Freelancer need customer and the only way to get customers is to market and sell your services.

Don’t know where to start? Buy some books and read them. I’ve posted plenty of recommendations in this column over the years. 

Anyway, if you follow the process defined about, you’ll probably end up as a successful freelancer. It worked for me and it’s worked for some of the people who’ve hired me to coach them.

Anyway, before I go, here’s some trivia. The word “freelancer” refers to medieval knights (i.e. lancers) who were “free” of the feudal obligation to serve an overlord and therefore got paid to fight. 

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