Freelancers aren’t typically trying to build million dollar companies. Creativity comes first, and the flexibility that freelancing offers makes it a much better lifestyle for some people than anything a permanent job might be able to provide.
Yes, financial independence isn’t the goal for freelancers, but a certain level of financial stability certainly is.
Not knowing where the next project is going to come from, and only having enough cash in the bank for this month’s rent is a surefire way to kill off your creativity and force you to take on projects that you’d otherwise say no to.
For me, working as a freelance web designer for over a decade, one of my main goals from the very beginning was to achieve financial stability as a freelancer. There is always scope for improvement, but I feel that I’ve managed to build enough of a business around me to provide that much needed safety net.
I can now afford to say “no” to the wrong kind of work, and command higher rates from my clients. Here’s how you can do it too.
As a freelancer, what does financial stability look like to you?
Before we dig into this topic it’s important to define that “stability” looks like to you personally.
For some people, stability might mean having a handful of regular-paying clients. For others, it might mean creating recurring income.
And for others, it might simply mean having enough money in the bank to survive a drought in new projects.
What does financial stability look like to you? Once you’ve managed to get a hold of this question, we can begin to put some strategies in place for taking steps toward that goal.
Strategies to create financial stability as a freelancer
In no particular order, here are my tips for creating a financial safety net when freelancing. Use a combination of these to achieve the same, and help put your mind at ease.
#1 Diversify your service offering
At times, I’ve had to take on work that isn’t really my cup of tea. In the early days, I even worked for a client in the morally ambiguous business of short term loans. No way would I do this today, but at the time, they paid me an ongoing fee each month which took the heat off me to make enough to pay my rent. Alongside web design I also dabbled in some SEO for them, which took me outside of my comfort zone. This diversification of my services helped me to not just cover my rent but teach me some new skills as well.
If necessary, consider diversifying your offering beyond your core service to get a wider array of work.
#2 Niche down further
As you might know, I’m a big fan of choosing a business niche and becoming a leader in that sector. Conversely to my previous point about diversifying, you might instead consider dispatching of your “everyday” work and specialising in a specific area.
This can take time to build, but if you choose to niche your service offering, you can position yourself as an authority in that field and have a steady stream of clients come to you. By becoming the “go to” provider for a specific audience, you will get more word-of-mouth referrals and (if done correctly) more search engine traffic.
This all helps to build a sense of income security as a freelancer.
#3 Seek long-term contracts
As a freelancer it’s good to have a handful of business clients, but don’t dismiss longer term contract roles.
This means dedicating a number of days per week to one company for an agreed freelance day rate.
Related: how to approach agencies for freelance work
I have done this on and off over my career, and it can prove immensely helpful to giving me a sense of financial security — usually contracts last for 3-6 months — as well as a shot in the arm for my income. Contracting can really boost your earning potential as a freelancer, as well as calm your money worries.
Financial stability can be achieved by working in long-term contract roles.
#4 Build recurring passive income
This is a huge topic but my favourite route to financial stability is by charging recurring fees to generate passive income as a freelancer.
Once set up, it’s minimal to maintain and can give you a real sense that your hard work is paying off. As a web developer, two common recurring income strategies can be created from:
- Website hosting and maintenance plans
The idea is to contractually agree a set fee that your client will automatically pay you each month. Typically, this is lower than your normal rate, but the key here is volume. If you can win enough clients and put them onto basic retainer contracts to cover your costs, financial stability can be achieved!
#5 Time and patience
I was reluctant to mention this because these days, everyone wants quick answers.
But truthfully, the path to financial stability in freelancing is a long one. You can’t expect to feel secure from day one, or even day 100. It takes time.
I still have wobbles, years after setting up my business. It’s also worth mentioning that really, there’s no such thing as stability. Permanence does not exist. Even if you reach a stable position, you can still lose clients. As a business owner, it’s your job to constantly work toward stability and ultimately, freedom, by doing what you love and serving your clients well.
Creating financial stability as a freelancer requires a hefty dose of patience, as you work hard for a long time to achieve your goals.
You CAN stabilise your finances as a freelancer!
For years I thought that money worries were just a “part of the game”
I just assumed that I had to get comfortable with not knowing where the next piece of work would come from. For sure, being comfortable with the unknown is a valuable skill to have in business, but if you can build a more predictable business, you should.
And predictability starts with your income. Hopefully the tips and strategies outlined here have given you the tools you need to create financial stability in freelancing 😅