Sure, freelancing has some big plusses, with the biggest one being the freedom. I love that freedom. A while ago we just got up and moved countries (something I described at length in the myths of Digital nomadism). Right now, I’m working in my swimming trunks, as after this I’ll be going for my daily swim in the Caribbean.
At the same time, freelancing isn’t some flying unicorn farting rainbows. There are downsides. The biggest one is the other side of that freedom coin – uncertainty. We’re creatures of habit and with freelancing that goes right out of the window. For many, that’s stressful.
So how do you deal with it? Well, being more proactive helps but isn’t a cure-all. The best tool is time. The longer you do it, the better you get at it. That’s down to you having a reserve of previous experiences to mellow out the downs and lessen their impact. So stick with it. It will get better.
Of course, that won’t help you much if you’re not feeling that great right now. So, for that reason, here are some ideas to help you acclimatize that bit faster.
(Geek note: The term ‘Freelancer’ originally referred to mercenaries who would ride around offering their services. Lances for hire, in other words. So, in many ways, horses with horns on their heads are closer to the original idea than people hunched over keyboards. No, I’ve got nothing for the rainbows farts, though here in Colombia we do eat a lot of beans.)
How we misunderstand the nature of randomness (And why that matters)
Let’s talk about randomness. Most people believe that ‘random’ means ‘evenly spaced out’. But that’s not right. Evenly spaced out is not random at all. If you flipped a coin 1000 times and got heads and then tails every single time you should worry that somebody is screwing with you. You would expect a string of heads or tails together somewhere as a natural ‘cluster’. That’s what you see in this cool visual from Wikipedia.
The thing is, we’ve evolved to find patterns in things. One scientist even argues this is what sets us apart as a species. And so, when see graphs like this after the fact, we think such clusters (and the spaces in between) are non-random. This is known as the clustering illusion.
So far, so boring.
It’s the repercussions thereof that are interesting. For example, during world war II it led Londoners to believe Germans were targeting specific London neighborhoods. And that spies were living in the gaps. Court cases have been fought because people feel the need to explain cancer ‘clusters’.
And it leads to a lot of stress for freelancers as well. After all, we spend a lot of time worrying about the ups and downs of our work. Oh God, this week I have almost no work, what am I doing wrong? Did I say something? Do something? Should I have done things differently?
Don’t do that! Seeing as many of these ups and downs are random fluctuations and you’re seeing patterns that aren’t there, this wastes your mental energy.
Easier said than done, some of you say. Sure, you’re right. On its own it is. Fortunately, I have a proven technique from the world of investing to help you out.
Increase granularity: Why freelancing is a lot like investing
On the stock market, some days you make money some days you lose it. That’s the way these things work. In truth, those ups and downs aren’t important. Objectively, what matters are two things:
- What price do you buy at.
- What price do you sell at.
What the market does to get you from point one to point two is irrelevant. It doesn’t matter whether the price rose steadily or zigzagged like a seismograph machine.
Of course, that’s not how we see these things. If we pay close attention to the price of the stock, then a zigzagging line is far more stressful. Yes, the ups are nice, but they don’t – as we know from prospect theory – compensate for the downs.
So what should you do? Easy. Stop paying so much attention. Don’t engage in ‘high-frequency monitoring’. Instead, check your portfolio infrequently. In that way, all the ups and downs are clumped together and you’re more likely to experience overall gain.
Use the same strategy as a freelancer. Don’t think in terms of days or weeks. Instead, look at income on a monthly or bi-monthly basis. Not only will this give you far less of a headache, it will let you sit back and enjoy periods where there isn’t much work!
Personally, I put all my earnings into a spreadsheet and only consider the sum totals of months past. Is there a rising line? Then all things are good. This insulates me from the vagrancies of randomness, while still revealing worrying patterns when they do occur.
You need a buffer
Another instrumental aspect of the freelance career is to have a buffer. This will give you a place to draw money from during the down months. What you need to make sure of is that you fill it back up again when the going gets a little less tough.
You should put the buffer fund in a separate place from the account that you live from. A great strategy is to give yourself a monthly salary that is automatically transferred to your spending account. That’s not at all hard to set up.
The advantage of this is that you don’t see that big number in your spending account during windfall months. This makes it far less likely that you’ll splurge. This is important, as to be a successful freelancer you shouldn’t consider good months in isolation. Instead, they balance out the months where you make less than you’re supposed to.
The best strategy is to base your salary on a chunk of your income – say 50 to 70 percent? – of what you’ve made on average over the last several months. This steady income will serve to mentally insulate yourself from the ups and downs of the freelance life. What’s more, if it’s only a part of what you’re making, you’re putting a nice big chunk of money in the bank. These you can use to take time off or to save for a rainy day.
I guess it’s possible to be a freelancer without long-term clients. It would be pretty hard though, both from a financial and a mental perspective. Why?
- Well, finding clients is work too; unpaid work, but still work. You don’t need to do that with long-term clients. This makes them very valuable – particularly when they’re low maintenance. After all, you need to do a lot less searching. What’s more, as you know each other it will be far easier to get on with it.
- Emotionally, it’s also a big boon, as having a client that you know you can depend on means that you’ll at least make some money in the bad months. That can offer you real peace of mind.
For these reasons, it’s always a good idea to be on the lookout for long-term clients. And when they appear, work hard to woo them and to maintain good relationships with them. It’s even worthwhile to keep long-term clients even if they pay you less than others do. Both for the mental safety net they provide and because you’ll spend less time on unpaid work.
Of course, at some point, you do need to cut the knot if they’re holding you back. But you want to make sure that you can fill the gap they’re leaving when you do – with more long-term clients if at all possible!
This is one that I need to embrace more as well. I am actually getting better at it. It took me a while though. What do I mean with ‘destress’? I mean, get away from the work. Go exercise, take day trips, and get out on the town.
When I started out, I worked every day. I felt guilty if I took days off. (Yes, that is another example of my life as warning. Now I’m down to about five days a week and I make sure I do more fun stuff. And you know what the crazy thing is? My income hasn’t been affected. I make as much as I used to (more actually) – in part because I have more good days where I’m more productive.
This is because days where I do things other than work get me away from ruminating, boost my mood and give me perspective. Then, when I get back to work I actually enjoy doing it more. And being in a good mood makes you output a better product.
So take days off. Do it for mental state, your work and – if that doesn’t convince you – the people that you love. They’d like to see you too, you know.