With the rise in remote work and the prevalence of freelance platforms, there is an increasing need to understand the potential risks associated with this type of employment. In this article, I will take a closer look at some of the most common risks associated with freelancing so that you can make an informed decision about whether it is the right career path for you.
Is Freelancing A Safe Career Choice?
Freelancing can be a great option for those who are looking to work on their own terms and make money while doing so. However, there are certain risks involved that you should be aware of before taking the plunge into freelance work.
Employee vs Freelancer
First, it is important to understand the difference between an employee and a freelancer. Employees are typically provided benefits such as health insurance and paid vacation days. Freelancers, on the other hand, do not usually get these kinds of benefits, and therefore must account for time off and any pension and insurance payments themselves.
Freelancers may also be vulnerable to problems such as late or non-payment from clients. This could put a strain on your finances if you are relying on this income for your livelihood. Similarly, there is also the risk of working with unreliable or fraudulent clients who may not pay at all. This isn’t usually something you need to worry about with traditional employment.
Lack Of Job Security
Finally, freelancing can come with a certain amount of instability and uncertainty in terms of job security. It is important to remember that there is no guarantee of consistent work and that you must continuously search for new clients and opportunities in order to remain financially secure.
However, if you are careful, do your due diligence, and consistently work to try and find new clients, freelancing can be a safe career path. But let’s take a closer look at some of the risks associated with freelancing.
The Risks Of Freelancing
Lack Of Job Security
As I mentioned above, one of the main risks associated with freelancing is the lack of job security. Because freelance contracts typically last for short-term assignments, there is no guarantee that you will be able to find consistent work from month to month and it is up to you to continually search for new projects and clients in order to remain financially secure.
This makes freelancing inherently risky, but if you put the work in, it can be just as stable an income source as traditional employment. There is no denying that the first few weeks and months can be daunting and you will run into dry spells, which can make this an unsuitable career path for many.
Late/Non-Payment From Clients
Freelancers are also vulnerable to late or nonpayment from their clients, which can put a serious strain on your finances if you are relying on this income as your primary source of livelihood. This is easy to avoid if you do your due diligence, set up proper contracts, and ideally take some of the payment upfront as a deposit.
Using freelance platforms is typically a safe way to do things at least in the beginning, although buyers can still cancel on you. However, these platforms usually have safe payment systems in place and customer support that can help ensure you have a smooth experience.
Unreliable Or Fraudulent Clients
There is always the risk that you might work with a client who is unreliable or even fraudulent and who may not end up paying at all. This is unlikely if you take care and vet your clients before signing on to any contracts. Working on freelance marketplaces can also reduce the risk here as there are usually measures put in place to prevent foul play.
Also be aware of the potential risks associated with unclear contracts or agreements that do not clearly specify what expectations and responsibilities exist between you and your clients. Without clear guidelines it’s difficult to know exactly what your obligations are and how you will be compensated for your work.
Lack Of Benefits
As a freelancer, you are not typically entitled to benefits such as health insurance, paid vacation time, or sick leave, so be sure to factor this into your budgeting when considering whether freelancing is right for you.
You’ll need to cover for these things yourself, which means you’ll need to adjust your rates accordingly and perhaps take on extra work.
Increased Tax Liability
Freelancers can also be vulnerable to increased tax liability since they are responsible for paying their own taxes instead of having them deducted from their wages. Be sure to understand the tax implications of freelance work before embarking on this career path, or invest in an accountant. You can end up in trouble if you don’t know what you’re doing!
Isolation & Lack Of Networking Opportunities
Finally, working remotely as a freelancer also means that you won’t have the same networking opportunities available to employees who are in an office environment and you may find yourself feeling isolated.
It’s important to continue to network and maintain relationships when you’re a freelancer, as otherwise you can easily end up distanced from everyone.
How To Stay Safe As A Freelancer
Use A Reliable Payment System
As a freelancer, you need to make sure that you have a secure payment system in place when dealing with clients. Consider using trusted online platforms such as PayPal or Stripe and avoid sharing sensitive financial information with anyone you don’t fully trust.
Working through a freelance marketplace is another way to stay safe in this regard, as they typically have secure payment systems in place.
Get Everything In Writing
Before starting any project, it is important to get all the details of the job and payment terms in writing. This ensures that both parties know what is expected of them and it helps to prevent misunderstandings later down the line.
While networking is an important part of freelancing, it’s also important to keep your personal information secure when connecting with other professionals online. Be wary of sharing sensitive information such as bank details or passwords with others and ensure that any websites you use are secure and trustworthy.
Take Care Of Yourself
Finally, remember to take time out for yourself during your freelancing journey. This can include anything from taking regular breaks throughout the day to engaging in physical activity or simply taking time to relax. Taking care of your wellbeing is essential for both physical and mental health, especially when faced with the stresses of freelancing!
But freelancing isn’t all about risks and stresses – there are lots of benefits to this career path as well!
The Benefits Of Freelancing
One of the biggest benefits associated with freelancing is the flexibility to set your own hours and work to a schedule that suits you. Freelancing offers the option of working from anywhere in the world as long as you have a reliable internet connection.
This opens up countless opportunities for travel and exploration, while still being able to maintain a steady income. But even if you don’t want to travel while you work, being able to work from home at any time of the day is still a great benefit of freelancing.
Increased Earning Potential
You can often charge higher hourly rates than employees as a freelancer (once you build up a reputation and the necessary skills), which can lead to increased earning potential over time. Plus, since freelancers can work for multiple clients simultaneously, they also have the potential to earn more than their employee counterparts who typically work for a single employer.
Working remotely as a freelancer also gives you more freedom to achieve a better work/life balance since you are in control of how much or how little you want to work each week. Freelancing can offer a better work-life balance because you have the flexibility to choose your own hours and work in a setting that suits your needs.
This can result in reduced stress and overall improved mental health, as well as more time to spend with loved ones, pursue hobbies and self-care practices, and foster personal growth and development. Of course, it will take some time to get to this level of stability.
Variety & Challenge Of Different Projects
Freelancing often offers the chance to try out different projects and challenge yourself with new tasks, which can be a great way to break up the monotony and stay engaged with your work. In addition to breaking up monotony, the variety and challenge aspect of freelancing also allows for the development and diversification of your skills.
By working on different projects, freelancers can expand their knowledge and experience in various areas, which can ultimately lead to more job opportunities and higher earning potential.
Freedom To Choose Projects
Finally, freelancers have the freedom to choose what types of projects they want to work on and are not bound to any particular company or organization. This also allows you to focus your efforts on projects that you are passionate about.
The freedom aspect of freelancing extends beyond just the ability to choose your own projects. Freelancers are also able to negotiate their own rates and working conditions, as well as set their own deadlines and timelines.
This level of autonomy allows freelancers to truly take ownership of their work and ensure that it aligns with their personal and professional goals, leading to greater job satisfaction and overall success.
Freelancing is a safe career path if you approach it the right way. There are inherent risks, but you can minimize them by taking some simple steps to stay safe as a freelancer.