Is it better to work as a freelancer or as a corporate employee?
Whether you would be happier as a freelancer or in a corporate job depends on many factors. After working in a corporate job for 30 years, I left the corporate world and became a freelancer. I love freelancing and wouldn’t go back to a corporate job unless was compelled to. However…
…I make about half as much money as I made in corporate.
…I pay $500 a month for health insurance.
…I work more hours than I did in corporate.
…The first couple years I lived primarily on savings.
…I do not get paid vacations or sick time.
…I do not receive any paid training and I need to pay for professional memberships.
For me, so many positives out weigh the negatives. I get more sleep now and feel healthier and happier. My dress clothes are in the back of my closet and are rarely used. What used to be commuting time is now productive time. My pets love having me at home. I can take an unpaid day off from work whenever I like. I can work from anywhere and I spend winters in a warm climate.
Most importantly, if I have problems with a client, I can end the working relationship. When you work in a corporate job it is very difficult to live through situations with an irksome employee or an over-demanding boss. When you have multiple clients, you don’t depend on any one client for your income and you can let go of clients who cause you stress.
Is freelancing right for you?
For most workers, most of the time, a corporate job will be a better way to work. As a corporate employee you will likely receive the following benefits:
- Paid training and perhaps even college tuition reimbursement
- Paid time off for illnesses and vacations
- 401K retirement savings plan
- Health and life insurance
- The security of receiving a regular paycheck
In some circumstances, however, it may make sense for you to be self-employed. Here are some scenarios which may apply to you:
- You are unable or do not want to work full-time in a corporate job. For example, perhaps you want to spend more time with your children or aging parents and that prevents you from committing to a 40-60 hour work week.
- You do not need the benefits provided by a corporate job. It could be that your spouse has a corporate job, making these benefits less important to you.
- You want to work remotely from different parts of the world.
Of course, all of this is predicated on you having a skill that you can offer. Some types of work are better than others for freelancing. The types of jobs that can work well for freelancing include:
- Communications Professionals
Job Monkey has a great article on freelancing that may help to give you another perspective on what it is like.
When I first quit my corporate job I was making iOS and Android apps which gravitated to making websites (White Buffalo Websites). But the skills you offer could be of any sort.
What is the greatest challenge of freelancing?
The most difficult challenge of freelancing out is finding clients, especially when you are first starting out. To build up a client base requires extensive networking.
I have heard other freelancers who work from home find it hard to get motivated to work every day. As a freelancer, if you don’t have deadlines to meet, then you need to find work. You need to be vigilant at keeping temptation at bay, and avoid snares like napping, long lunches with friends (unless you are networking), and gaming. For me, volunteering is a trap that I fall into. I love to help friends and students with their technical needs, but need to constantly draw boundaries so that it doesn’t affect my income.
It also can be a challenge to work with clients. Often clients are unclear about what they want you to do. Sometimes you disagree with their approach. And on occasion they may be slow to pay or not pay you at all.
When you are freelancing, you don’t have a steady paycheck. Some months will be better than others. For your own financial stability you should try to have three months of income in the bank.
For me, freelancing is a dream come true. However, it needs to be noted that I already had paid off my home, had enough saved for retirement, and had about one year of living expenses in savings before I quit my corporate job. In most situations for most workers, a corporate job will better because it will provide a 401k for the future, paid vacations, and health insurance.