What to Do Before You Quit Your Day Job
The longer you can wait before becoming a full-time freelance writer, the better. For as long as possible, build up a reputation, client base, collection of references, and emergency fund. Cultivate a variety of skills and one or more areas of expertise. Don't see a late start as a disadvantage; clients tend to trust more mature clients than their young, hungry counterparts.
You will know you are ready to quit your day job when you:
- Are earning rates that would be sufficiently high to support you were you to work as a freelance writer full time
- Have enough demand from clients to fill the majority of your billable hours in a given month
The further you are from earning enough to support yourself from day one, the riskier your transition will be.
Potential Career Paths for Freelance Writers
In earlier lessons, we discussed types of writing and areas of expertise in which freelance writers may specialize. These specialties are typically grouped for use in common career paths, which include:
- Freelance writing for small businesses
- Freelance writing for the web
- Corporate copywriting
- Catalog copywriting
- Advertising copywriting
- Freelance journalism
- Article contribution to consumer-facing publications
- Article contribution to industry publications
- Ghostwriting and co-authorship of nonfiction books
- Research writing
- Grant writing
- Speech writing
- Technical writing
While some of these career paths are conducive to full time employment with one company, most can be approached from a freelance perspective.
Income Levels to Expect as a Freelance Writer
Based on data collected in 2010, the United States Bureau of Labor Statistics reported the following median incomes for freelance writing-related professions:
- Writers and authors: $55,420 per year; $26.64 per hour
- Editors: $51,470 per year; $24.75 per hour
- Reporters, news correspondents, and broadcast news analysts: $36,000 per year; $17.31 per hour
Generally speaking, you might expect to earn no more than $20,000 in your first year and between $30,000 to $40,000 in subsequent years as you build up experience. To get a better idea of the income you might receive based on the specific types of services you offer (were all of your billable hours each month to be utilized, which is not likely), refer to an industry association or publication's rate chart, such as the Editorial Freelancers Association's rate chart.
Primary Sources of Income for Freelance Writers
Client work comprises freelance writers' primary source of income. Additional sources of income typically come from:
- Freelance work outside one's central area of expertise: Such as resume creation services provided by a freelance writer who primarily focuses on white paper and business plan creation
- Freelance work beyond the realm of writing: Such as social media management jobs taken on by a freelance writer who specializes in content marketing
- Book sales: Many freelance writers also publish books on the side
- Editing: It is not uncommon for freelance writers to take on editing work from fellow freelance writers or authors
Given that much of your work is likely to take place via online exchange, you should be prepared to accept a variety of online payment types. To learn more, visit our guide to accepting payment online (and beyond).
Establishing Financial Security as a Freelance Writer
Create an Emergency Fund
In addition to not earning very much, freelancers have to contend with uneven and unpredictable income streams. An ample emergency fund will play a vital role in your financial security as a freelance writer. Build up a savings account that can cover your expenses during dry spells. Ideally, this account should be able to cover you for at least six months (better still, it will cover you for a year or more).
Cultivate Diverse Skills
To further reduce risk, diversify your skill set and client base. A multi-talented freelance writer can easily switch from one type of writing to another as demand shifts from season to season and year to year. Keep a finger on the pulse of the freelance writing world. Pay attention to niches that appear to pay well and are not yet be flooded with competition. Begin to cultivate new areas of expertise before your present specialties become obsolete.
Do not limit your diversification of skills to freelance writing alone. Consider cultivating abilities that complement the core freelance writing services you provide. If you specialize in resume creation, consider developing college application and career coaching services. If you specialize in content marketing, brush up on social media strategy and consider offering supplementary services as a social media and community manager. In addition to mitigating risk, diverse abilities enable you to take on longer-term jobs and charge higher rates.
Reduce Time Spent on Unprofitable Tasks
When work is flowing in, maximize profitable time. Because not all of your hours as a freelance writer can be billable, find ways to reduce time spent on non-billable tasks such as bookkeeping, client correspondence, and skill improvement- without compromising your work, of course.
Find a Cash Cow to Support Less Lucrative Work
Should your favorite type of freelance writing work not yield particularly high rates, supplement it with a "cash cow" speciality that you can use to supplement your income. It is fine to indulge in low-paying hobbies (they can keep your creative juices flowing, after all) so long as you are able to maintain an emergency fund, pay off any outstanding debts you might have, contribute to a retirement fund, and pay your bills on time.
Administrative Tips for Freelance Writers
Automate the Perfect Client Experience
You can boost your earning potential by reducing time spent on non-billable tasks and increase client satisfaction by creating an organized, quasi-automated system for interfacing with clients. By thinking through communications, negotiations, contracts, and clients' desires ahead of time, you can create procedures and templates that can be easily customized for each new client with minimal effort.
Consider creating the following documents while keeping in mind the ideal client experience:
- A general operating procedure, dictating how you reach out to, negotiate with, and send queries, updates, final products, and invoices to clients
- Templates for commonly-sent messages (project updates, thank you notes, meeting follow up, friendly "keep in touch" notes to past clients, etc.)
- Templates for common contract types
- Templates for invoices
Keep all of those documents and notes in one, centralized place. When a certain task arises, you can simply open up a folder, tweak a pre-formatted message, and send it off.
Maintain Solid Bookkeeping Practices
To minimize accounting and tax-related stress:
- Save copies of every invoice sent and check received
- Save every receipt related to deductible business expenses (which must be ordinary and necessary)
- Keep receipts, checks, and invoices organized, safe, and clearly labeled
- Familiarize yourself with Schedule C and Schedule SE well ahead of time so you know what information you need to carefully track
- Maintain digital records of profits and losses (as well as any other information that will need to be entered in your tax return) in a spreadsheet for easy reference
- Organize notes and records as you go along so that you won't have to wade through a mess of papers ome tax season
- Hold on to records for at least three years
Don't Skimp on Health Insurance
Freelance writers, though self employed, have quite a few insurance options available. In addition to doing independent research on insurance plans for self-employed professionals, you might consider getting or finding insurance through a freelance writer's association.
Browse the resources offered by the following organizations for inspiration:
- The Society of Professional Journalists: Members have access to insurance and financial planning services through an Indianapolis-based financial services firm and consultants Harry W. Riley, III and David N. Brown; they are entitled to free quotes on life, health, disability, and long-term care insurance, as well as liability coverage and retirement solutions
- The Editorial Freelancers Association: Members enjoy health plan and healthcare discounts through Careington International Corporation, RBA Insurance Strategies, LLC, and TEIGIT
- The National Writers Union: Members have access to group dental and vision coverage and receive a free prescription drug discount card; though the NWU does not offer health insurance directly, they offer TEIGIT plans as well as access to individual insurance plans in New York City and Nassau, Suffolk, Westchester, Rockland, and Orange Counties
- The Freelancers Union: Even casual visitors to the site may use their search tool that helps you look up local long-term benefits plans with group rates (only qualifying members- and membership is free- can get the group rate benefits)
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Finally, make sure you have reviewed this lesson’s required reading (displayed at the top right of the page) before taking the quiz- you will be tested on information covered in those guides!