Why Freelancers Need Income Diversity More Than Ever
It’s been a rough start to the year — at least it would have been without income diversity. Since January, I’ve had three different agency clients let me go in favor of hiring in-house. On top of that, two different clients cut their standing monthly orders by half.
That’s a lot of income to see fall by the wayside. In fact, it amounts to about 2/3 of my income.
Fortunately, I’ve managed to stay afloat because I live in a low-cost area and because I have a level of income diversity that doesn’t just rely on a client or two.
Work for Hire and Sudden Income Loss
I spent a lot of time building up regular gigs. These are nice because you have some degree of stability (until you don’t). A set number of articles each month can ensure something approaching a “real” job when it comes to your income.
However, the downside is that work for hire also comes with the risk of sudden income loss. Whether someone decides to hire an in-house writer full time to replace you, or whether a client dramatically cuts your workload, it can mean instant income loss.
Most of my agency clients were kind enough to give me notice, but my other clients simply announced that they weren’t going to order the same amount of work. It can be devastating to go from a client paying $2,000 a month to that client paying $1,000 a month overnight.
You can protect yourself, to some degree, with a work for hire agreement or contract that requires notice, but the reality is that sudden income loss can be a real problem if you haven’t planned to protect yourself with income diversity.
How to Promote Income Diversity
Promoting income diversity as a freelancer is vital. Here are some of the ways you can diversify your income:
- Different clients: Don’t rely on just one client. In the past, I’ve had “cornerstone” clients, but I try to keep them limited to no more than providing about half my income.
- A mix of one-off gigs and long-term gigs: Even though most of my freelance gigs are long-term gigs, I still like to keep up with one-off gigs. Having a couple of these projects around can provide some quick cash when needed.
- Other side gig income: Sometimes I drive for Lyft. I don’t do it a lot, but if I have a day where I’ve got a wide swath of time, I’ll turn on the Lyft while working on other projects and get a little extra cash. There are other side gigs like that you can do with a little extra time and effort.
- Your own products and websites: I have a book that still makes a little money for me. You can also develop and sell courses, do consulting, and build your websites. I’m in the process of building up my websites into the income-producing level they should be at.
- Other investments and income sources: I also have some money in taxable investment accounts. I regularly add to these accounts, which include dividend-paying funds. Many of my freelancer friends also have rental income. Figure out how you can earn a little income from different sources, and you could see improvement.
No matter your situation, income diversity is vital to your financial future. As a freelancer, though, it’s especially important to cultivate different revenue streams.