Lesson 1: Before You Get Started – Napkin Finance

Lesson 1: Before You Get Started

The basics

Self-employed workers are in business for themselves. To make it work, you have to find clients, manage your workload, learn how to market yourself, and balance your books (or find tools and pros to do it for you).


The benefits of self-employment are many, including:

  • Autonomy
  • Flexibility
  • Opportunity
  • Potential for great earnings

Fun facts

  • Skilled freelancers earn a better hourly rate than 70% of other workers.
  • More than half of freelancers say they wouldn’t go back to a 9-to-5 job for any amount of money.

Right for you?

For all its virtues, however, self-employment isn’t for everyone. Before you embark on your new #bosslife journey, ask yourself whether you:

  • Are self-motivated
  • Have a strong professional network you can draw on to find clients
  • Are comfortable cold-calling strangers and talking up your skills
  • See a clear opportunity in your industry

You don’t have to be an industry veteran to succeed at self-employment. But it helps to realistically assess your strengths.

How to transition

Your first few months—even your first couple of years—of working for yourself can be tough financially. There’s a learning curve to self-employment, and unless you’ve got a full client roster before you start, you’ll need time to start bringing in steady income.

It’s a good idea to have a few months’ worth of expenses saved to cover any gaps while you get your solo career off the ground. Here’s how to build up that cash cushion:

Track your expenses for a month.
Include everything from rent and utilities to groceries and streaming.

Tally your one-month expenses.
Multiply that total by at least three (though six is ideal).

Put whatever you can into a savings account.

Once you hit that magic number, you’re ready for self-employment!

If you’re struggling to save, consider a hybrid approach. Start freelancing on the side, taking on a client or two to build income and name recognition. When you’ve got some momentum, you may feel more comfortable diving in. Plus, the extra income can pad your savings fund that much faster.

Freelance vs. emergency funds

Building a self-employment fund can help you cover your expenses during a career transition. But keep it separate from your emergency fund, which should also include six months of expenses. Your emergency fund is there in case you can’t work or your roof suddenly needs to be replaced. Your self-employment fund is there to help you while you switch professional gears.

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The simple information you need
to clean up your not-so-simple finances.