6 Tips for Overcoming the Scary Financial Uncertainty of Working for Yourself

Working for yourself can be scary. The biggest reason why? You don’t always know how much money you’ll make each month.

In fact, this can be SO scary that it keeps a lot of people who would love to work for themselves chained to their employer’s cubicle.

When you work for a company, you can count on that paycheck hitting your desk every two weeks or so. Well, sort of. The truth is, traditional jobs aren’t really secure anymore, though they sometimes feel more secure than freelancing or starting your own business. In many ways, bringing in revenue from several clients — or spreading out your risk — is smarter than relying on a paycheck from one source.

Yet even though we know this, going off on your own can still be stressful. So how can you get over this mind-block to find freedom in your career? By making several changes that make you feel more financially secure.

Notice I said “feel” — because that’s really what this is about. What I’m about to suggest will make you more financially secure, but the biggest affect will be how you FEEL. Chances are, that feeling of uncertainty is what’s holding you back even more than your actual situation.

Here are six strategies that have helped me manage the financial stress of working for myself so I can actually enjoy it:

1. Recognize that your income might vary each month. And train yourself not to panic if you make less one month than you’d like. Because if you’ve got your ducks in a row, you’ll also make MORE than you expect some months, which means it all evens out — or maybe even tips the scale in your favor.

It can be difficult to cope with making less than you’d like one month, even if you know you’re making less because you’re putting extra time into a project that will pad your bank account the following month. That’s why it makes sense to look at your finances over a longer term — like six months or a year — rather than month to month.

This might not apply immediately when you make the leap to self-employment because you’ll be in survival mode, but shift to this long-term mindset rather than month-to-month as soon as possible, because it will help you keep your stress to a minimum.

2. Set yourself up to have a little more work than you need. This is a fine line because you don’t want to have so much work you can’t handle it, and you always want to have enough free time that you can pursue an awesome opportunity if it comes along; after all, that’s why you’re working for yourself, right?

But if you have, say, one more client than you need, that means you won’t go into panic mode if you lose a client; you’ll have plenty of time to replace that revenue with another source. And that also means you won’t worry so much about losing a client, because it’s not the end of the world if you do.

When you first start working for yourself, it might be difficult to build in this buffer. But it will become easier and easier as you establish your business and work with more clients, because more people will want to work with you. And that’s when you should shift your mindset from “survive” to “build a buffer.”

3. Save money before you go off on your own. Or have another safety net, like a spouse who will keep you afloat if your business doesn’t work out.

You may or may not need that safety net, but that’s not the point; the point is to feel more secure. And you will feel more secure — and therefore be more likely to take the business in your dream direction — if you have a backup plan in case you fail.

If you’re working a day job and scheming about a leap to self-employment, now is the time to save. Save as much as possible while you have that consistent paycheck. Even if you’re doing nothing else to work toward your goal, saving money is one big, practical thing you can do NOW to set yourself up for later.

4. Understand your finances. It’s easy to pass that responsibility to a bookkeeper when you run your own business, either because you don’t know how to keep your books or because you want to focus on other parts of your business. But looking closely at your financials each month can actually be reassuring.

Going over my own books — even though my accountant mom does much of the legwork — helps me understand exactly how much money I’m bringing in and how much I’m spending, how close I am to meeting my goals and more. It makes me feel in control. (And no, we don’t use any fancy accounting software; we keep it simple with Excel.)

5. Work with clients who will hire you on retainer. One-time projects can be fun, challenging and lucrative, but when they end, you’re back to looking for work.

Instead, try to find clients who want to work with you on a recurring basis and hopefully pay you a monthly retainer. That means you can expect to make a certain amount of money each month. It doesn’t eliminate risk entirely, because clients will come and go, but working this way does wonders for peace of mind.

It also allows you to budget your time accordingly, because you’ll know how much bandwidth you have for new work. And you can always take on additional one-time clients if your schedule allows.

6. Know you can make more money if you want to. The beauty of working for yourself is you can take on more work if you want to make more money. Yes, you have to find that work, and that’s the hardest part. (Here’s more about the best way to land new clients.) But unlike a day job — where you can work your butt off and not see your income increase — working for yourself leaves you in control of your income. Working for yourself increases your potential exponentially.

You have to get over that scary feeling of uncertainty to reap that benefit — but it’s so worth it.

Does the financial part of working for yourself scare you? What would help you overcome that fear?