I was curious; how much money (in terms of months of expenses) should someone save up before quitting their day job and freelancing full-time?


5 Answers 5


As others have said .. all answers are opinions to some degree. For myself, I have dipped in and out of contract/freelance work over a 40 year career. I've built up about 15 years of freelancing in that time, so I can add practical experience to my opinion.

My rule of thumb is 1 year's net income kept in cash as an emergency fund. That sounds a lot, but it has served me well. I had the good fortune to adopt this policy at a point when I was working in a country with much lower salaries (in terms of number) so it was a smaller target to aim for. But, as I've moved around, and as my full-time salary has vastly increased, I've maintained this cushion - regardless of whether or not I'm in full time or contract mode.

Does it work? I've weathered at least 4 major recessions this way. The most recent was the 2008 meltdown which saw me laid off and out of permanent work for nearly 3 years. Many of the householders around us in our estate lost their homes to repossession. Our cushion gave me time to start picking up direct contract work which - while nowhere near my normal income level - combine with our savings to let me retrain, keep paying the mortgage, keep the children enrolled in private schools, etc.

But it takes discipline. When I finally landed a permanent job again we piled every spare penny into rebuilding the savings - no vacations, no unnecessary expenses (stick with that 20 year old car) and so on.

Oh, and live on a cash-only economy. If you don't have the cash to buy a new car outright, look for a used car you can afford. If you can't find one .. you can't afford to own one (insurance, maintenance, fuel, etc) so take the bus. The only loan we've ever taken was our mortgage - and we make that our number one priority when there's no money coming in.


Ideally you should start freelancing in your spare time while still maintaining your day job - either after you get home from work, or on the weekend - and not transition into full-time freelancing until your side work is going steadily enough for the transition to be safe. This will help you gain clients, and get an idea of what to expect from freelancing full time.


I have been freelancing since 1994 across Europe.

How much money to start? How long is a piece of string.

Will your client pay you within 30days? 60days? Don't assume big rich clients will pay soon - it does not always work out that way. I had one client who took seven months to pay 10 weeks worth of invoices.

Figure out your expenses - will you work locally or have to travel long distance? Will you need hotel, train/plane expenses? Will you eat out alot? Gas money?

I have had contracts 30minutes from home, and in another country - The one nearest obviously cost me less (I walked to work), whereas the others abroad cost me a couple of grand a month minimum.

I strongly suggest you get liability insurance - In all my contracts it demands I have it though nobody has requested to see it - its not expensive, but without it, if your service negatively impacts your clients business, they'll knock on your door and your credit rating!

Best of luck!


If this is your only source of income, I recommend 6 months worth of living expenses. I came up with this number based on my spouse's home theater installation business (which he had for 15 years). There were slow months and busy months, and a pattern emerged after 2-3 years. Having a 6-month cash reserve gives you enough to handle most emergency expenditures, and not needing to panic the first time you hit a slow period, or if you need to wait 30, 45 or 60 days for a client to pay your invoice.

Once you've been in business for 2-3 years, you'll know if your niche also has slow months.


Biggest problem is the cash flow of payments into your account as noted above 30 days/ 60 days /90 days plus, you have to be able to keep going while at least waiting for first invoices to be paid. I used a 3 month amount, but found that to little, now I keep 6 months cash in 'float' but that is after 10 years of freelancing and knowing which customers pay on time and which do not.

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