Thread by @ClaudiaWu_

How much money do you have to save before starting as a fulltime #freelancing #contractor / #consultant?

MUCH more than you think.

A thread 🧵🧵

[Forword]

I started my freelancing career in April 2021 and heavily underestimated the amount of money I have to spend for my living AND the business before my first income.

Here's what you have to consider:

1/13

[time frame]

Your first payout happens after:

➡ you land a contract (read on)
➡ you registered taxes and stuff (read on)
➡ remaining time until project start (read on)
➡ 1 month of work +
➡ avg 1 month due date for payment

2/13

[time frame - find a project]

In order to sign a contract you will have to speak with a bunch of poeple.

A bunch means TENS of freelancers, recruiters, project managers, department heads, CEO's, ... Poeple with whom you already worked, poeple who could know someone, ...

3/13

[time frame - find a project]

Many of your contacts will want to work with you. But they won't (yet) because:

➡ the project starts in x months at the earliest
➡ there's no money
➡ COVID
➡ whatever

90% of your calls won't land you a contract (now). Keep this in mind.

4/13

[time frame - find a project]

If you already have tens of contacts, I recommend at least 1 months of time only for finding a project.

If you don't, 3 months. At least.

5/13

[time frame - tax registration]

If this is the first time you earn money as a non-employer, you will have to learn to organize tax and legal stuff. And this is much more stressful than I thought.

I spent 1 month only for tax, accounting and legal stuff.

6/13

[time frame - remaining time to project start]

If you land your first project, you won't start immediately. It's very common to start with the next month or even the next but one if there's only one week left. So you have to wait 3 more weeks on average.

7/13

[time frame - summed up]

1-3 months ➡ land a contract
1 month ➡ tax and legal stuff
3 weeks ➡ remaining time til project start
1 month ➡ work
1 month ➡ due date for payment

⏩ 5 - 7 months

until you get your first payout ❗

8/13

[amount of money - private]

Calculate your monthly costs for your private life.

I live in Germany and in my case this is ~1.200 € (1,400 $).

9/13

[amount of money - business]

In Germany you have to estimate your yearly profit in order to pay your taxes IN ADVANCE FROM DAY ONE.

That's why you should lower your estimation because the prepayment can ruin you in the first months.

I pay ~400 € (470 $) monthly.

10/13

[amount of money - business]

If you employer payed your health insurance, you have to pay for it yourself from now on.

In Germany the public health insurance is very expensive. As a computer scientist, you can assume ~ 900 € (1,050 $) every month.

11/13

[amount of money - business]

And don't forget your business expenses like:

➡ domain + website
➡ cloud storage
➡ accounting software
➡ bank account
➡ tax consultant
➡ hardware
➡ etc.

For me this is 70 € (80 $) per month.

12/13

[amount of money - summed up]

1,400 $ ➡ private costs
470 $ ➡ taxes
1,050 $ ➡ health insurance
80 $ ➡ business expenses

⏩ ~3,000 $ per month

time frame * amount of money:

⏩ 15,000 - 21,000 $ ❗

13/13

This is only a rough overview and even more important: This is my personal calculation.

I hope you got a better feeling about calculating your savings in order to start your fulltime freelancing career.

Please drop your experiences below! 👇

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Thank you very much and have a nice day 🤗

https://twitter.com/ClaudiaWu_/status/1418634813297332226?s=20