Expenses to Think About When Switching to Self-Employment

Switching to self-employment can be a very fun, exciting, and life-changing time. For some of us, self-employment is a dream that we hope to reach some day. When you finally are at the time in your life when you have reached the possibility of self-employment, many positive yet some negative changes may occur (but to me – everything is well worth it).

When switching to self-employment, there are many things that you of course want to think about. If you are switching from a full-time job that offers benefits, then it is very likely that you will be losing many of these benefits.

These benefits might include health insurance for you and/or your whole family, a retirement plan, life insurance, vacation time, and so on.

Health Insurance.

If your employer and past employers have always paid for health insurance, then health insurance may be a shock to you since you are not used to paying it.

Some try to skip health insurance to try to save money in their monthly budget, but I would recommend to at least get SOMETHING. You never know what may happen, even if you are extremely healthy.

Saving for Retirement.

You should be saving for retirement separate for your work anyways on top of what your work contributes, but when you switch to self-employment you should be trying to save more and make up that difference.

Some employers help with employees’ retirements a decent amount, so you will really need to make up for the difference. Add retirement as a line in your budget so that you don’t forget!

Life Insurance.

Same with health insurance and saving for retirement, your employer may have completely covered the cost for your life insurance as well. It may not have been much of a coverage, but it was probably still something.

Life insurance such as AAMI life insurance will definitely be something that you need to look into, especially if you have a family and/or others relying on you and your income. Life insurance makes things so much easier for others if something were to happen to you.

If something were to happen to you, you would want those who you love and care about to focus on healing and getting better, not having to go to work the next day and worrying about the next dollar.  Life insurance can make things much easier for you and your family. Even the peace of mind is worth it.

Vacation Time.

I’m going to guess that you probably got some kind of vacation. Yes, not everyone gets vacation, but some do. If you are switching to self-employment, you will be giving up this vacation time most likely.

It would become very hard to take a vacation and not work at least in some way.

Did you see your expenses increase or decrease when you switched to self-employment? What benefits do you miss the most?

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