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Anxious about a recession? Start thinking like a freelancer

Anxious about a recession? Start thinking like a freelancer

Excerpt from businesstimes.com.sg

Anxious about a recession? Start thinking like a freelancer

ALTHOUGH freelancers have been around for ages — the English word originally referred to a “free lance”, or a medieval mercenary willing to fight for the highest bidder — working independently is often considered unstable. It certainly can be, but it also forces one to learn how to navigate uncertainty, recover from setbacks quickly, and diversify income — all of which are useful in times of economic turmoil.

As mass layoffs start to make headlines and recession chatter gets louder, there is a lot that traditionally employed folks can learn from freelancers to defend their finances amid anxiety about a downturn.

It’s hard to know how many people are currently full-time freelancers, as there are different sources of data and most of what’s available is pre-pandemic. In the US, a 2018 IRS report on sole proprietorship in the returns found 27.1 million individual tax returns reported income earned from sole proprietorships. A 2019 Gallup and Intuit report estimated there were 32 to 44 million self-employed US adults. But people working at companies can also have second jobs that qualify as self-employment, which makes things even murkier.

What freelancers have in common, no matter the industry, is that even during boom times and tight job markets, they have to plan ahead, budget and pivot when the unexpected arises. Projects get cancelled all the time. Clients can take months to make a payment or never pay at all. Depending on your type of work, there can be chaotic seasons followed by nary a potential client. Rejection is commonplace.

This kind of volatility becomes more widespread during a downturn, as companies look to reduce overhead and cut costs as much as possible. Taking a few pages from those who work independently may help alleviate some stress.

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