Freelancing is not for everyone. While a flexible schedule and occupational independence are attractive incentives, they come with emotional and, at times, financial risk. Without the security of a steady paycheck, freelancers need to prepare for the “what ifs.” So, here are the three reasons why every freelancer needs a bigger-than-average emergency fund.

Medical Expenses

Health care is expensive, particularly if you’re paying the bill on your own. While salaried employees rely on their employer’s health insurance to cover most expenses, freelancers have to manage those costs independently. That’s why self-employed people often choose more affordable but less comprehensive coverage. This strategy certainly saves money each month, but in the event of an unforeseen medical expense, your financial freedom may be in jeopardy. To offset this risk, evaluate your and your family’s medical history, consider local health care costs and save accordingly.

Legal Fees

Just like no one plans to get sick, no one plans to have legal trouble. However, if you’re self-employed, it’s a possibility that’s dangerous to ignore. Consider the nature of your work. Is it contractual? Is there room for ambiguity around what a “job well done” means? If so, saving for any future legal fees is an investment in your peace-of-mind.

Loss of Work

If a 9 to 5 employee is dependable and hard-working, their position is fairly secure. Even if they’re let go, there’s usually advance notice or severance compensation. Not so, for the freelancer. A freelancer could have a steady supply of work for months, and without warning, be jobless. That’s why you should set aside extra dollars to help you weather any financial droughts. If you have to use that emergency fund, it’s also important to replenish it when work starts up again.

The Cost of Being a Freelancer

While everyone should have an emergency fund that can cover their cost-of-living for at least 90 days, we believe freelancers should set aside enough for at least 6 months. Having those dollars available, will give you the peace-of-mind to pursue your work without the stress of financial uncertainty.

If you’re a freelancer in the Atlanta area and you’re unsure of how much you really need to set aside, schedule a meeting with one of your advisors and start planning your path to financial freedom.