I’ve been self-employed as a freelance writer for over six years now. And I have to say, for all the benefits the job entails – being my own boss, choosing my own schedule, and doing work that I enjoy – a stable income isn’t one of them.
While certain parts of my income might be more stable and consistent than others, this still doesn’t mean that monthly income doesn’t rise and fall, sometimes quite irregularly. This fluctuation means that it can be difficult to regulate income, and that means I have to be prepared for a variety of situations and scenarios.
The ups and downs of freelance income
There has been a 600 percent gap between my highest and lowest earning months this year. This just goes to show you how extreme freelance income can be at times. While those higher income months can be invigorating and motivating, the low income months can be just the opposite, and they can be real motivation killers if I’m not focused on the longer term and understand the fluctuations involved in self-employment income.
In an effort to combat these highs and lows, there are several steps I take, which also help me better regulate the stability of my income.
Having multiple income streams
One of the best ways to guard against the rollercoaster ride that freelance income can be is by having multiple income streams. With money coming in from different sources, it acts as a sort of hedge against a drop in income in any one or even two such streams. In essence, you’re kind of diversifying your income streams so that even if one goes away completely, you’re not left devoid of income.
This has worked out well for my situation, and it means that while income has dropped dramatically at times, I’m still able to recoup some level of costs since I’m able to rely upon other income streams to help make up for the decline.
Backup forms of income
Sometimes there are those income streams that don’t count for much when things are good since you’re focusing on other, maybe more secure, income streams. These forms of income could be slightly lower paying, the work might be more difficult, or you just may not enjoy doing the work as much. Therefore, these forms of income may not be a first or even second choice on the list of work options; however, in a bind such income could save the day.
I’ll typically carry certain available sources of income along with me, even if it don’t use them for months or even years, in the event of a significant income loss or reduction. In this way, I can resurrect these income streams as backup sources of income in the event of an emergency or to cover extremely low income-earning months.
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The author is not a licensed financial professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.