OK, the first thing to understand about being a freelancer is that you’re going into business. You are therefore a capitalist. You may not want to be, but here you are. Sucks to be you.

Therefore, you need a very clear idea of what you are trying to do with your life. However you plan to get by, you need a bigger goal that you’re working toward. “Make rent” will not cut it anymore.

Money

When I came out of school at age eighteen, I just set off running, doing things. I figured if I did them well enough, money would magically stick to me. And it’s true, it sort of does. But I really wish someone had sat me down and laid out the birds and bees of money.

There are two ways to make money: labor and capital. Labor means you put in an honest day’s work, whether it’s laying bricks or dispensing legal advice, and you get paid for that work. Capital means you already have money, and that money earns money. That can be interest on cash, or dividends from stocks or bonds. Income from capital is really the way to go, because you literally don’t do anything and you get paid anyway. Living entirely off interest and dividends is called being rich, or retired.

This brings us to your mission in life: to go from living on 100 percent labor and 0 percent capital, to 0 percent labor and 100 percent capital. There are other forms of income, like state pensions and social security, if they even exist by the time you retire, but best not to rely on those. Let all of that be a pleasant surprise. But retirement will not be something that magically happens to you at sixty-five. It’s something you have to work toward every day of your life.

Now, most people are idiots, so their retirement has to be taken out of their control, through things like company 401(k)s. Going freelance includes the implicit declaration: I’m adult enough to manage all that myself.

But are you?! A crucial metric of how well you’re freelancing is how well you’re progressing with your money. But it’s not the only metric. There are others, like: Do you despise the very fabric of your days? And, are you an asshole? But it’s a super important question, and one I constantly see freelancers completely ignore.

When I was in college, I spent a ton of money on books. I bought a lot, I read a lot, I amassed a house full of ’em. It brought me a lot of pleasure. But that seems vaguely naïve now. What retirement looks like to me is not a library of books, but of small virtual devices that produce 4 percent income per year. If instead of books (which are a pretty twentieth-century affectation at this point anyway), you collected income-producing securities, you slowly bring forward the day when you are not living gig-to-gig. Let’s say Treasuries are getting 4 percent, and you reckon you can live as an old codger on $40,000 a year, then all you need to do is save up a million bucks. Get going.

You need to know where you are on this road. If you look at these numbers and think, Holy fuck, there’s no way I’ll make it, then get the hell off the road and get a job with 401(k) contributions. If you think you can make it, (A) welcome, and (B) I like the fight in you, kid, and (C) keeping an eye on your capital income means that you will sleep one entire fuck of a lot better.

NB: Don’t be an asshole capitalist. Don’t invest in companies that pollute egregiously, make weapons, or fund people and programs that go against your moral code.

NB: America taxes income from labor (income tax) at up to 40 percent, and income from capital (capital gains) at 15 percent. So don’t let anyone tell you that America values hard work. It actually penalizes hard work and smiles on dividends.

NB: In America, the Self-Employed retirement account (SEP-IRA) allows you to allocate up to $53,000, before tax, toward your retirement account (twice, actually, if you’ve incorporated your freelance business as a separate entity). That’s plenty. Do it.

Do your bookkeeping in Google Spreadsheets. Enter everything you spend, the day, or at least the week, you spend it. Enter everything you’re paid, too. This is the place to keep a record of everything you’re expecting to bring in, and when and how much you’ve invoiced people for. Unpaid and late invoices are the perpetual ball-aches of being a freelancer, and you need to be all over who owes you what.

Take the time to put together a virtual tax return so you can see what kinds of things you can claim as expenses, and keep an eye out for those things as you go through your year. You can’t run a business if you don’t know this stuff. For example, health insurance: There’s no reason not to spend money on a reasonable plan, as you can deduct your premiums straight off your tax liability. These are important, no-brainer life decisions, and if you’re not all over them like white on rice, you have no business pretending to be an adult. Go back inside.

All these things will have a massive impact on your ability to manage your anxiety.

Anxiety

I addressed money first, but anxiety is probably the most important currency in freelance life. There’s literally no point being free of the bullshit and indignities of corporate life if you’re too worried about your life to sleep well, exercise, not smoke, or take four-day weekends with a clean conscience when you damn well want. In other words: to enjoy your life.

I basically take the view that the human body has evolved to work correctly. Sure, now that we live way longer, we have to take extra care of ourselves with things like toothpaste and yoga, or our teeth and spines will deteriorate before we’re ready, but you should be paying attention to your body’s warning lights.

What this means is that if you are so anxious or unhappy that you have to put tape over the warning lights with psychotropic drugs just to function like a person, then freelancing might not be for you.

Find some hobbies or something that will help manage your anxiety. For me, that includes swimming, running, keeping my finances on track, and getting up early after eight hours of good sleep. Find what works for you.

Booking Work

This is the hard part: Being a top-gun video journalist or children’s entertainer is worthless unless you can also make money walk in the door. Entire TV series revolve around the gross contortions people get into to make and retain sales. And one way to get that money is by participating in the orgy of hustlers feigning friendship with other people who might be useful to them. But that’s how it’s done: Go to parties, meet people, impress them with wit or charm or sex, and if you like each other when the smoke clears, maybe they’ll give you some business. In America, everything is business. Keep your receipts.

Sell-Side and Buy-Side

The way I see it, the best way to develop a portfolio of clients is first to work on the other side of the fence. Example: You want to be a freelance writer. Head to New York City and rent the cheapest digs you can stand. Spend a few years as a staff writer for Vice, Hearst, Condé Nast, BuzzFeed, HuffPo, Thrillist, or any combination thereof. Go to parties. Meet everyone. Throw yourself at Twitter like it’s your job (it is). Slowly you’ll figure out who the right commissioning editors are, and they’ll figure out you’re a legit person to hire. Most staff writing jobs will allow you to write elsewhere, so in this case you can incubate a freelance career from the comfort of an admittedly shit salary.

Eventually, if you know what you’re doing, National Geographic will consider you worth sending to the Congo at four bucks a word, and you’re there. You can always go back and take a staff job for a while, if it all gets to be more stressful than rewarding.

Prosper

Once you’ve got the emotional and financial structure in place, it’s there to facilitate one of three possible life plans:

 1. Make money

 2. Be happy

 3. Change the world in some way

You need to figure out which one, or which mix you’re going for. Most people get spat off the higher-education conveyor belt and rather joylessly go about pursuing #1, and not even that well. Plenty of people—most activists, for example—are miserable and poor but still choose #3, as they literally cannot rest until they see justice done. Freelancers tend to have a pretty big quotient of #2, if for no other reason than they’re prickly and difficult people who resent taking direction from morons.

Overall, committing to a life outside the sensory deprivation tank of corporate America is difficult, cold, nerve-racking, and fraught with peril. But it’s also kind of great, because it means you get to be present for your own life. So do your math, and you’ll stay sane and in the black.

Fire up a spreadsheet and ask yourself the hard
questions. Look at your finances. Where are you now,
and where do you want to be?

***

You don’t need to solve everything with this
spreadsheet; just create a place where you can be
honest with yourself going forward about what
money comes in, what goes out, and what you
are hanging on to.