Who’s Financially Secure?


As most of us freelancers know, financial security is a huge issue the moment you become your own boss. Aside from the obvious flux in income, self-motivation and project management are obstacles for many new freelancers. For those reasons, some people believe that full-time employment is the smarter option. With steady income, outside management and set hours, full-time jobs may seem safer, but don’t be fooled.

While I hate to use the “all eggs in one basket” analogy, it’s just about perfect for this comparison. In the debate between freelancers and full-timers, let’s consider the basics.

All Your Eggs

When you work full-time, you typically have a set number of hours and, therefore, a set weekly or monthly income. When pay day rolls around, you can count on a certain amount slipping into your bank account. Your bills are fixed, too, so this allows for easier budgeting and less anxiety when the first of the month hits.

When you freelance, you typically have good months and bad months. Sometimes, you’ll be running around like a chicken with its head cut off, desperately trying to meet all of your deadlines. Other months, you’re wondering how many times is considered healthy to watch old episodes of Twin Peaks. Of course, this means that budgeting is trickier. You’ll have to save your pennies during the fruitful months, and scrounge a little during those less lucrative times.

Now, what happens when you lose a job?

If you’re a full-time employee, everything goes out the window. You’re left – probably – with a monthly income of zero dollars. You start over, look for a new job, and hope that your savings can last until that moment when you hear the magical words, “You’re hired”.

If you’re a freelancer, losing one job probably won’t make a difference. Sure, you might have an extra tight month, but you’re used to those every once in a while. You still have many other contracts, are bringing in money, and are well-versed in the ways of budgeting, even when the sum of your month’s work is depressing.

Unexpected Expenses

Medical, vehicular and housing expenses can come up without notice. When you have a full-time job, you often have medical insurance through your employer. Covering most costs for emergency situations, medical insurance is invaluable over the course of your working life. With medical insurance built into your pay cheque, you have a worry-free safety net.

Also, when you work full-time, you can more readily get a loan for those unexpected housing or auto costs. The bank will ask for records of employment, which you can easily provide via your last T4 or most recent pay stub.

When you work as a freelancer, you need to save and plan for these unexpected expenses. You may have to pay out-of-pocket for prescription drugs or medical devices, or you can purchase private insurance that is offered at a monthly rate. Either way, this needs to be a conscious choice if you want to reduce the stress of unexpected medical costs.

If you need a car or home loan, working as a freelancer sometimes makes this difficult. You need a ton of paperwork – quite literally, you may need to bring a thousand pounds’ worth of paper along with you – in order to qualify. Where full-timers need proof of employment for recent months, you need to prove your overall financial security over a longer period of time, sometimes including invoices and bank statements from years back. It’s a pain, but not impossible. I remember freelance friends of mine going through a nightmare when looking for a mortgage provider. Eventually, they got all of their paperwork in on-time for the deal to move forward, but every institution is different, so you might want to do the leg-work first and get pre-approved for mortgages if you’re a freelancer.


This is more dependent on the individual than on the employment situation. Full-timers can plan to save a set amount each month. For example, when I worked full-time, I set up an automated savings plan. On each pay day, a set dollar amount would transfer from my chequing to my savings account. Because I knew how much to expect from each paycheque, this was an easy way to save money without thinking. That said, I get an admittedly nerdy thrill from things like automated payments and savings plans. So much organization and I don’t have to do a thing. What a dream.

When you work as a freelancer, you can set up a similar plan whenever you deposit your cheques. While it won’t happen automatically, it can be simple. Plan to save 10% – or whatever you can afford –of every cheque you deposit. Before you head to the bank, calculate the savings portion. At the bank, deposit the large amount to your chequing account and the smaller savings portion to your savings account.

If you aren’t a saver, these are great tactics for painlessly starting a savings account. No matter if you’re a freelancer or a full-timer, you can save just about the same.

The Bottom Line

If you’re self-motivated and like the idea of being your own boss, freelance work is an incredibly secure means of employment. With your income diversified across many contracts, you’re less likely to find yourself totally unemployed. If you opt for this route, you may want to plan a new savings approach and look into private insurance for unexpected medical expenses. If you love planning as much as I do, this is a great, flexible option for you. You can make your own hours and work from pretty much anywhere. I spent my summer working from Europe and often take long lunches to catch up with friends during the week.

If you like the structure of the nine-to-five and outside management to complete projects, stick to full-time work. While freelancing is lucrative over time, you’ll get nowhere unless you push yourself. Likewise, if you’re inclined to over-stress about financial security, freelancing isn’t for you. The steady income of a full-time job is like a warm blanket of comfort that many of us freelancers wish we could curl up into every once in a while.

Of course, consider whether freelancing is even possible in your field. If you work in the creative arts or IT, it’s something to consider. If you work in human resources, you’re out of luck.



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