I get a lot of people asking me for advice about striking out on their own. They’re tired of working for the man and they want the creative and personal freedom that comes with being self-employed. They ask about how to get clients, how to come up with ideas, what kind of Wacom tablet to buy. However, none of them ask about one of the single most important aspects of self-employment. Insurance.
Let me start with an analogy. Let’s say your career is like the ocean. You can cross that ocean as part of the Navy on a giant ship. This would be like having a paying job at a company. You take orders, do your job, and so does everyone else. If you get hungry, you go to the mess deck, if you get hurt, you go to sick bay, if you hit a storm someone up on the bridge figures out how to get you through it. You are a cog in a well-oiled machine. Now, let’s say you get tired of being that cog and you decide to be one of those maniacs who crosses the ocean solo in a tiny boat. If you get hungry, you’re the cook. If you get sick, you’re the doctor. If the boat breaks you’re the mechanic. If you fall overboard, the whole ship goes down with you. Knowing that, you would plan accordingly. You would pack food, water, medicine, and spare parts. You would consult maps and tide charts and invest in the proper safety equipment. You would make sure everything was in order before setting out. Anything else would be potential suicide.
Obviously what I’m getting at is that going freelance is like sailing across the ocean solo. You have to wear many hats, several of which you might not like, but you have to wear them anyway. One area where I consistently see creative people failing to plan properly is the area of financial preparedness. Not a week goes by where I don’t get a tagged in a message on Facebook for a GoFundMe that goes something like this. “My friend so and so is a great guy/girl. Last week they were out with friends/on vacation/walking down the street and they fell off their motorcycle/got mugged/got diagnosed with some awful disease. They need $5000 to cover medical expenses and lost wages because, you know, as an artist they can’t afford insurance.” Let me be frank. Regardless of your age you are in deep denial if you think you’re going to make it for the next 20, 30, 40 years without getting sick or injured. It’s going to happen, and you need to plan accordingly. I made it through my teens, 20s and 30s doing all kinds of dangerous shit without a scratch, then seriously injured myself when I was 40, long after I was done living dangerously. At some point something will happen to you too.
But you can do something to keep this physical trauma from turning into financial collapse as well. Go get yourself some Obamacare. For anywhere from about $150 to $250 a month you can buy health insurance. It may not cover everything. My surgery still cost me $10k, even with insurance. But without insurance it would have been $100k. It turned a financial catastrophe in to a financial set-back. Getting sick ain’t cheap in America. Insurance is simply a fixed cost of doing business, just like your rent, your equipment, and your electricity. If you can’t come up with that kind of money take a good look at your expenses. If you can afford weed you can afford insurance. If you can afford a motorcycle you can afford insurance. If you can afford cable TV, tattoos, beer, or video games you can afford insurance. Often it’s not so much “can’t” as it is “don’t wan’t to.” I’ve always wanted a fast car. Not a quick car, but a balls out fast one. With what I pay for insurance, savings, and retirement every month I could easily make the payment on anything short of a Ferrari. But if I get cancer a fast car won’t do shit for me and my family. So I continue to drive an old Subaru and pay my insurance bills. If you truly can’t scrape up $150 a month maybe a part time job is in order. Working 3 days a week still leaves 4 other days to paint, design, and make stuff. Or maybe going solo isn’t right for you at this point in time. Keep your day job and do more freelance/painting/furniture making at night to build up your client base. Don’t set out on your voyage only partially prepared.
Medical insurance is the most important thing to have in place, but there are other financial considerations as well. Do you intend to GoFundMe your retirement too? Someday you will be old and tired. You may still be working, you may love what you do and do it until the day you die. But if you can’t afford to be sick now what makes you think you’ll be able to afford it then? Do you really want to be living hand to mouth when you’re 85? Thus another fixed cost of self-employment is going to be some kind of retirement fund. A few hundred bucks a month, every month, starting in your 20’s and you’ll be a millionaire by the time you retire. Remember, you’re going solo. Nobody tells you what to do, but nobody is going to bail you out either.
Another thing to think about, especially if you have dependents, is disability insurance. If you’re so fucked up that you can’t work then bills will begin to pile up. Self-employed people do not qualify for any government unemployment assistance or disability. Get a plan that will give you cash every month to keep the lights on. You should also consider life insurance. If your family loses a breadwinner that will be a significant ongoing financial burden for them.
Last but not least you need an “oh shit” fund. I call mine the “zombie apocalypse fund.” It is a stash of cash that you tap into in the deepest of emergencies when only money will avert the apocalypse. Things that do not qualify: credit card bills, braces for your kid, a new TV. Basically anything you “want” instead of “need.” Things that do qualify: Eviction notices, cancer treatment, your house burning down. Be your own GoFundMe. Just like old age and sickness, something shitty and expensive is going to happen to you eventually. Don’t let it sink your little boat.
I know all this makes me seem like a square-ass bummer of a guy, but it’s the reality of working for yourself. You are your own safety net. Insurance is a part of running a business, Just this week I added liability insurance to the suite of insurances I carry. Hopefully I never need it, but if I do I’ll still be in business when the emergency passes, not bankrupt and picking up the pieces of my career. Setting all this up doesn’t need to be a pain in the ass. Call an insurance broker, it’s what they do. They can set you up with what you need and what you can afford. Yes, it’s expensive, and no you won’t use it everyday, but the other choice is flying without a net and face-planting into the sidewalk when the inevitable emergency arises. When I started out on my own I went a talked to a broker that set me up with medical, life, and disability insurance as well as an IRA. I still carry those plans, with certain changes and additions, to this day. You can pay out every month for insurance, or periodically get nailed with $5,000 to $500,000 disasters. Being self-employed, whether you’re a painter, a writer, or a blacksmith means taking care of all the aspects of your business, not just the creative part.
And while you’re thinking of it, email your congressperson to demand single payer healthcare.