3 Safety Nets Freelancers Need To Have
/Going freelance is exciting. You don’t have the restrictions of a regular 9 to 5 office job. You can choose your own hours. You can choose your own clients, and you can choose your own office space.
There is a lot more freedom that comes with this type of work, but that freedom comes at a price. You won’t have the same safety nets as someone working at a regular office job. You won’t have an IT department to fix your computer equipment if it breaks down. You won’t have an employer-sponsored health plan and PTO days for when you get sick. You’ll have to handle these problems all on your own.
Make it easier to handle problems by setting up safety nets. These are three essential safety nets that every freelancer should have:
1. Health Insurance
You don’t want to be without health insurance. Medical costs can become very steep. Without insurance, you could get sick or injured and end up with a stack of medical bills you can’t afford to pay down. So, it’s important that you have this safety net.
The majority of Americans get their health insurance through employment. According to the U.S. Census Bureau’s Health Insurance Coverage report from 2021, approximately 54% of Americans received health insurance through their employer or a family member’s employer.
How can you get health insurance as a freelancer? Well, you have a few options. If you are married, and your spouse can access health insurance through their employer, you could get coverage through their plan. If you’ve recently left an employer to become a freelancer, you could access COBRA coverage for a limited amount of time, or you could try to sign up for an affordable healthcare plan through the healthcare marketplace.
2. Extended Tech Warranties
You need your computer equipment to stay in top shape. If that computer equipment broke down, your work life (and the paychecks that come with it) will go on hold. You’ll want to be ready to handle computer repairs or replacements immediately.
One safety net that can help you cover the out-of-pocket costs is an extended warranty plan. An extended warranty plan will prolong the coverage you’d receive in the original manufacturer’s warranty. So, you will continue to get coverage for repairs and replacements related to manufacturing defects, even once you’ve crossed the original deadline.
An extended warranty plan will also cover different types of repairs and replacements, like repairs for water damage. The plan may not grant you full coverage for these fixes, but it can at least reduce the overall costs and make them easier to pay out of pocket.
How can you cover other out-of-pocket costs for tech repairs? Use an emergency fund.
3. Emergency Fund
An emergency fund is an essential safety net that every freelancer should have in a savings account. An emergency fund is a personal collection of savings specifically reserved for urgent, unplanned expenses. After bringing your computer to the repair shop, you can draw the necessary savings from your fund to pay the final bill (after using the extended warranty, of course).
Your emergency fund can also help you in cases where you’ll receive no coverage through your warranty. For instance, some extended warranties will only replace smartphones that have been stolen or lost — not other devices. So, if your laptop is stolen, you might not get coverage.
What if you don’t have enough in your emergency fund? Then, you could turn to a different payment method, like an online personal loan. An online personal loan could give you access to temporary funds that will help you cover the emergency expense in a short amount of time. Afterward, you can follow a repayment plan.
Do your research about online loans before you apply. There are common loan terms you should know to understand the type of account you are signing up for. Learning them will help you make an informed decision.
Never freelance without any safety nets. Set up your health insurance, extended warranties, and emergency fund right away.