4 Money Moves to Make Before You Dive Into Freelancing in 2024

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Have dreams of becoming a full-time freelancer? Don’t forget to consider how your finances will change. Find out what money moves you should make first. 

In 2024, many workers are looking to make career moves. While some hope to land a raise or transition into a better-paying job with a new company, others are ready to try freelancing. There are many benefits to freelancing, including greater flexibility and independence. But you want to ensure you’re financially prepared.

Are you ready to try freelancing in 2024? Here are a few money moves you may want to make first so you’re well-prepared for the transition.

1. Establish an emergency fund

Unexpected circumstances can arise anytime, whether you’re an employee or a freelancer. Costly unplanned bills for car repairs or medical expenses can quickly eat away at the money in your checking account. Before you dive into freelancing in 2024, it’s best to have a solid emergency fund so you can cover unexpected expenses that come your way.

Now is an excellent time to start building your emergency fund so you’re prepared. Deciding how much money to stash away is a personal choice, but having at least three to six months of expenses saved for emergencies before fully committing to freelancing is not a bad idea. You’ll feel more confident knowing that you have extra cash on hand for emergencies.

READ MORE: Emergency Fund Calculator

2. Reduce your expenses

Reducing your expenses can also be a wise move to make before you leap into freelance work. Building a thriving freelance business can take a lot of time and effort. Cutting spending can be beneficial because you’ll have fewer costs to worry about as you grow your business, which can help reduce your financial stress.

If you need guidance finding ways to reduce your monthly spending, budgeting apps can help. Using one can give you more awareness of your spending habits, so you can make positive changes. These apps also make setting and following a budget easier. It’s best to avoid overspending so you don’t risk racking up costly credit card debt.

3. Plan for how you’ll afford healthcare and other benefits

If you’ve previously worked a traditional job, your employer likely provided benefits like paid vacation time and health insurance coverage. They likely also covered some of the costs associated with these perks. As a self-employed worker, you’ll be responsible for any benefits you wish to enjoy. These additional costs can be a shock if you’re unprepared.

Before making the move to full-time freelancing, you’ll want to budget and save up for paid time off and have a plan for how you will afford other benefits you may be used to, like healthcare coverage. It’s also essential to consider your retirement planning needs and determine what steps you will take to reach your goals. Now is the time to research your options before you dive in, so your finances don’t suffer.

4. Make sure you can afford to cover your living expenses in full

Before leaping into the freelance lifestyle, make sure you can afford a drastic lifestyle change like this. While your work situation may change, you’ll still need to pay your existing living expenses. Many people start freelancing part-time before committing fully to ensure they can earn enough money to afford all their bills.

Before quitting your job, consider whether doing a part-time trial run makes sense. Doing this can give you time to build your client and project base and decide if freelancing is ideal for you. The last thing you need is additional financial stress caused by lack of money.

If you’re brand new to this type of work, research online to get a better feel for typical rates in your industry. You want to know ahead of time how to price your work so you’re paid fairly and can afford your lifestyle. Social media groups can be excellent resources for this kind of research.

Always keep your finances in mind

As you make changes in the new year, don’t forget to keep your finances in mind. Life as a small business owner and freelancer is very different from that of a traditional employee, and your finances will be impacted if you make this kind of career move.

For additional financial tips to help you navigate your journey, check out our personal finance resources.

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