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Thursday, February 7, 2013
Freelance Toolbox

Funding your future

By Dana E. Neuts

One thing I miss about having a full-time corporate job is the benefits — sick time, vacation time, health insurance, a retirement plan, etc. It was nice having someone else take care of those pesky but necessary details of life.

As a freelancer, I have to provide all of those benefits for myself, or simply do without. When I started freelancing full time in 2004, I fell into the latter category — skipping benefits altogether — and it wasn’t a comfortable place to be. I was happy just to be able to pay my bills. Insurance, retirement planning and time off were luxuries I couldn’t afford.

Fortunately, as I got into the groove of freelancing and cash flow increased, I was able to obtain those benefits, and I recommend that all freelancers do the same. Ideally, when starting out, it is good to have a financial cushion, a second income (e.g., part-time job, unemployment) or a significant other to help fill any income and benefits gaps. If, however, you’re solo like I was, you can still build benefits into your compensation. Treat yourself like an employee to cover yourself financially in the short and long term. Here’s how:

TIME OFF

When you calculate your hourly rate, or decide your minimum pay rate for publication, factor in costs like vacation time and sick time. You can find a good formula for setting your rates in Chapter 6, “Name Your Price,” in Michelle Goodman’s “My So-Called Freelance Life.”

Bonus tip — Journalists procrastinate (gasp), and sick time is a good reason not to. Let’s say you have two weeks to file a feature story for a local news outlet. Instead of starting the research right away, you wait until the beginning of the second week — day 8 — and you come down with the flu, missing three days of work. You’re going to be hard pressed to pull that story together in a couple of days. Sure, you can do it, but it won’t be your best work. It is better to start early, just in case you need the extra time due to illness or injury.

RETIREMENT PLAN

There are a handful of retirement planning options available to freelancers, including a solo 401(k), SIMPLE 401(k) and traditional and Roth IRAs. You can Google “retirement plans for freelancers” to get more information. But to decide which one is right for you, contact a financial adviser to discuss your options. Most advisers will provide an initial consultation at no charge, and you can find a good adviser by asking your freelance friends for referrals.

INSURANCE (LIFE, HEALTH, ETC.):

Life and health insurance are regulated by states, so the options for freelancers vary based on where you live. A good starting point is to do a quote comparison on a site like eSurance.com or to contact a local insurance agent that represents several carriers. If you want more direction or simply don’t want to deal with the details, SPJ has a new option for members: SPJ Solutions, a partnership between SPJ and WestPoint Financial. Through this service, SPJ members can get individual insurance advice and quotes from experienced advisers on a variety of products including life insurance, health insurance, disability coverage and long-term care.

LIABILITY INSURANCE

Some freelancers feel the need to protect themselves with a liability insurance policy, also called errors and omissions coverage. This type of coverage can be difficult to find and often requires an agent to secure a quote. Through SPJ Solutions, however, members can get quotes from multiple carriers to decide which policy best meets their needs.

No matter where you are in your freelance career, you will need to provide your own “employee” benefits, but it doesn’t have to be daunting. There are many options for fulfilling your needs and protecting your financial future. You just have to know where to look.

For more advice on freelancing, visit SPJ’s Independent Journalist blog.

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