Is Freelancing Really a Financially Risky Decision?

I am often told that I am brave to rely on a freelance income. It is seen as inherently risky to be a freelancer, and a job is generally seen as synonymous with financial security. While I understand the rationale behind this attitude, I cannot say that I completely agree with the conclusion.

There are, of course, plenty of risks associated with being a freelancer, and mitigating them is vital. But for the purposes of this article, I’m only looking at income security. Are you really more at risk of a sudden drop in income if you are self-employed?

The risks of freelancing

Yes, there are risks associated with freelancing. I could lose a customer tomorrow and some of my future income would disappear. Depending on the client, it could be 1% of my income, or 35%.

A customer can also simply decide not to pay. I can honestly say that this is a rare occurrence, but when it does happen there is often surprisingly little that can be done about it, given the legal costs involved in recovering, often a relatively small amount of money.

Freelancing also means that I am responsible for many things that my employer would be responsible for or contribute to if I were employed. This includes matters such as pensions and healthcare.

It’s time for a disclaimer. I live outside the US. So as long as I pay my taxes, I’m entitled to free universal health care. My country also offers a (limited) state pension for everyone who pays to the general tax system, and there is a good provision for private pensions specifically aimed at freelancers and sole traders.

The system you live in can affect how risky freelance work is for you, so it’s vital to keep that in mind.

The risks of having a job

There are also risks associated with having a job. If I had one, and no other income, I could lose my job tomorrow, and 100% of my income with it. Moreover, that income would be fairly difficult to replace quickly.

While it is possible to pick up a new freelance client from a job site with a pitch that takes about 15 minutes, without leaving my desk, finding a new job is usually a little more time consuming and can be difficult for some employees. even moving house. Freelancing is generally a more flexible way of life.

Having a job also generally means being tied to a specific location for as long as that job lasts, meaning you’re at the mercy of the economic forces in that area. People who complain about the cost of real estate in certain metropolitan areas always have a job that keeps them tied to that area. The freelancers can consider other options, other cities, even other countries.

Is it best to have both?

Many would argue that it’s best to have both a job and a freelance sideline, and I disagree. I wouldn’t advise anyone to give up their job to freelancing if they haven’t already started. But sooner or later, successful freelancers have to make a decision. Full-time freelancing? Or start turning down lucrative freelance work because they don’t have enough time for it?

Maybe turning down the job is the right decision for you, but before making a decision, take a good look at your overall position. Consider how secure your job is, the benefits it offers you, and the potential growth of your freelance business.

Only you can make the decision, but don’t assume that freelancing is always the “riskier” option. Sometimes multiple customers and revenue streams can spread the risk rather than increase it.

Karen Banes

About the author

Karen Banes

I am a freelance writer specializing in online business, personal finance, travel and lifestyle. I also work as a hired content creator, helping brands and companies tell their stories, grow their audience and reach their ideal customers. I have lived, worked and studied in six countries on three continents. Visit my blog to learn how to run your own (very) small business on your own terms. You can also contact me on my website or follow me on

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