As a freelancer, you don?t get paid vacation or employer-subsidized health care. Here?s how to create a benefits package as a freelancer.
This blog post was written as part of a sponsored program for State Farm?. All views expressed are entirely my own, and were not influenced or directed by State Farm.
One of the most challenging aspects of being self-employed is replacing the benefits package you might have had when working in corporate America.
I love the freelance lifestyle, and I love what I do. However, it?s been a bit of a challenge over the years to create a benefits package that works for me. Here?s what I?ve learned about putting together benefits that work.
Start with Your Budget
As always, you need to figure out where you stand with regard to your budget. A useful budgeting worksheet from Next Door? Chicago can help you clarify where you stand, and figure out how much you have to put into your benefits package.
When you look at your budget, figure out which items are most important to cover right now. You can grow your benefits package as your business grows. To begin, though, it makes sense to be sure that you have health insurance (since it?s the law) and that you are saving for retirement (yes it?s possible). Health insurance and retirement are the cornerstone of most benefits packages, so it makes sense to start with these items.
Find Health Insurance as a Freelancer
I had a good experience with my state?s health care exchange. I was able to find an affordable and serviceable plan with a respected insurer. I chose a high-deductible plan because I like taking advantage of the Health Savings Account (HSA). If you have a family, or make a large number of medical visits each year, this might not make sense for you. Run the numbers to see if a high-deductible plan, combined with an HSA, might work.
Even if you don?t use the HSA, there are ways to get affordable health care. If you have a partner, find out if it is possible to obtain coverage under his or her insurance. Some companies don?t offer partner plans, so you might still need to find your own. If you have children, though, it can make sense to keep them on a partner?s insurance. My son is on my ex-husband?s employer plan, so I don?t need to worry about his insurance.
Start looking for insurance at Healthcare.gov, or you can compare costs with organizations like Freelancers Union or AvantGuild. When you create a benefits package as a freelancer, this should be your first step.
Retirement Planning as a Freelancer
Many freelancers overlook retirement savings. Don?t be one of them. You should start putting away money for the future as soon as you can. The important thing is to build a habit of saving, even if you aren?t setting aside a huge amount. There are plenty of resources that allow you to set aside small amounts of money each month for retirement. I opened a Roth IRA several years ago to get started.
There are other choices, too. You can set money aside using, SIMPLE or SEP IRAs, or by putting money in an Individual 401(k). Review your choices and figure out what plan works best for you. You might be surprised at how fast your nest egg can grow as you set money aside.
Other Benefits for Your Package
As you create a benefits package as a freelancer, don?t forget to build in other perks. The freelance lifestyle is all about flexibility, and I use that in my own planning. I like to take time off, creating ?vacation? days. However, as a freelancer, that takes a little extra effort. In order to have a true vacation that doesn?t involve work, I usually have to plan ahead, turning work in early. It?s the hardest part of creating my benefits package.
Other important considerations are life insurance and disability insurance.
Life insurance is essential and will give you peace of mind knowing that you have provided for the financial security of your loved ones if you can?t be there for them.? Disability insurance provides protection for your income when you are unable to work because of a covered disability.? As a freelancer, it can be a little difficult to get disability insurance, but not impossible. It can be well worth it to have it in place if you end up in a position that keeps you from working. You can review your life insurance options online or stop by a local State Farm agent?s office to discuss your coverage options in greater detail.
Putting together the right benefits package as a freelancer can be challenging, but it is possible. Take a look at your needs and your budget, and do your best to develop a plan that allows you to achieve success.