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Working for The Man When You Are The Man

Tips for the self-employed.

Justin Sullivan/Getty Images

Recently, I was on a panel for black journalists discussing how to build a career as a self-employed journalist. When I did this same panel a few years ago, the attendance was sparse. This year, there was standing room only. 

As jobs dry up in newsrooms, more and more of my comrades are being forced to branch out on their own. According to Kelly Services, a staffing and employment agency, freelance professionals make up 26 percent of the U.S. working population, up from 19 percent in 2006.

Forced unemployment stinks. There’s no sugar coating it. Like many of the people in the room, I did not become a freelancer by choice. A few years ago, I was laid off by a large TV network. A few weeks later, I learned that I was pregnant. It was hard enough holding a job as an African-American financial journalist on TV, but being a pregnant was going to make it even more challenging. I had to get creative.

After a lot of soul searching, I realized that I didn’t need an organization to validate my journalistic skills. I marketed my expertise and have branched into lucrative directions.

It is a testimony to the creativity and tenacity of the human spirit that the number of self-employed individuals has risen during every economic downturn of the last 50 years. The Bureau of Labor Statistics says the number of self-employed Americans rose by over 200,000 in March, from an estimated 8.96 million to 9.18 million.

Self-employment forces us to dig deep, to figure out our strengths and passions, and to take our futures into our own hands. This difficult road can turn out to be the best thing that ever happens to you. Whether you work for yourself around the clock or if you’re just looking to make ends meet, there are some things you must do in order to capitalize on self-employment.

Get Your Financial House in Order—You hear from financial experts all the time that you should have at least enough money saved to cover six months worth of expenses in case of an emergency. When you work for yourself, your income will be sporadic. You’re always in a state of emergency. Cut your unnecessary expenses and give yourself a monthly savings target. Allocate some of that money toward debt reduction if you’re struggling with credit cards, and a savings cushion is a must.

Pay Your Insurance PremiumsFreelancers Union is a great resource for low-cost health and disability insurance. (The site has retirement plans and job leads.) Many of us tend to skimp on disability insurance. It’s devastating not having these insurance policies when you need them.  Remember you have a six times greater chance of becoming disabled than of dying prematurely. As a self-employed individual, you are the only person who can create your own safety net.

Keep Saving for Retirement—You’re still going to get old. While you can borrow money for education or a house, I’ve never seen an “I’m too old to work loan.”

Simplified Employee Pensions (SEPs) allow you to contribute and deduct a percentage of your income. You can deduct 20 percent of your self-employment income or $42,000, whichever is less. Keogh plans are another option, and unlike SEPs, you do not have to make your contribution by the due date on your tax return. Roth IRAs are also a great option with lower limits. It’s easy to stop saving for retirement when you are self-employed. We tell ourselves that we will make it up later. Keep in mind, however, that retirement savings are a way to reduce your taxable income which becomes really important when you are working for yourself.