Pros & cons of freelancing: Customized costs and benefits

Freelancing is exciting because you do it however you want to. You can be your own boss, manage your own time, and make as much money as you are able.

Similarly, you are also able to set up your lifestyle how you’d like to, including the costs and benefits of your job. You can decide what work-related expenses are worth it to you to take on, what benefits and supports you need to live happily and securely, and how much time you want to take off to devote to leisure or family.

Like all the other pros/cons I’ve covered in this monthly column so far, this ability to customize your costs and benefits is both a pro and a con.

Pro: Customized costs and benefits

In a full-time job with an employer, you may bear costs that you have no choice about taking on. You may pay money every month to commute to work, dress in work-appropriate attire, or go to work-related social engagements that you feel obligated to attend. There is little you can do about these costs, despite the fact that you didn’t choose them yourself.

As a freelancer in many fields, there are very few costs you must shoulder. All you need is the equipment to do your work, some space to do it, and an internet connection. Some freelancers with low equipment needs, such as writers, can start a thriving freelance business with only a laptop. You don’t even have to have your own Wi-Fi; many people use the Web to work at cafes or public libraries.

Freelancers who do more equipment-intensive work, such as photographers, will have more costs. But in many cases freelancers don’t have to spend money on things that don’t bring a direct financial return, like commuting, suits, and beers with their coworkers.

Similarly, freelancers can dictate the benefits that will serve their lifestyle best. If you have a large amount of savings that could cover a true medical emergency, and therefore find it sufficient to buy only catastrophic health insurance coverage, that is a choice you can make.

You are also able to determine how much time off you take, which is typically a “benefit” dictated for full-time workers by employers. If you are able to afford it, you can take as much vacation time as you’d like without imperiling your job security. Some freelancers I know take two or three months off every summer to be with their families and go on vacation. They are able to make enough in nine or ten months to cover their needs for the whole year.

Con: Customized costs and benefits

It may be great to take unlimited vacation and avoid paying for a pricey commute, but on the flip side, being self-employed means no company is going to be bearing the costs of your overhead or supplying you with benefits like retirement contributions, health insurance, or sick pay.

The difficultly and expense of securing and maintaining quality health insurance is a major impediment to full-time freelancing in the U.S. Before the Affordable Care Act began requiring insurers offering individual plans on the private market to cover pre-existing conditions, many workers with pre-existing conditions could not even contemplate self-employment. The ACA has opened up the possibility of private insurance to many who couldn’t access it before, but going this route is still prohibitively expensive for many.

And as nice as it is to be able to take as much time off as we want, freelancers don’t get paid on those days, or on sick days or holidays. Freelancers have to take all of this time off unpaid and work those expenses into annual earnings. Not having paid time off is a con of freelancing, as it means that you may not take enough vacation to refresh yourself or that you may work through illness or holidays that you would have liked to have celebrated.

Being responsible for your own benefits has other drawbacks as well, such as not getting any subsidy or assistance with life insurance, disability insurance, or retirement savings. You’ll have to fund and make time for any professional development you are interested in and any conferences or other events you want to attend.

The costs of providing your own benefits add up fast, even if they are offset by avoiding the costs of working full-time, such as commuting. Customizing your costs and benefits offers you flexibility in how you set up your life, but increases the amount you need to make and the logistical concerns you need to manage.

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