3 Big Expenses You Must be Willing to Take On Before You Decide to Become a Freelancer

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Joanne Poh



Freelancing from home definitely has its perks—no MRT breakdowns, no sarcastic bosses, no need to battle the tissue packet-wielding crowds during lunchtime.

But as much as your salaryman friends might assume you get paid for lying in bed, what they don’t see are the late nights plugging away at work while everyone else is asleep. And they certainly don’t think of the fact that you need to fork out the cash for a number of expenses on your own, expenses that people who’ve got a company to take care of them never have to worry about.

Here are three major expenses freelancers need to foot the bill for.


Business costs

If you think you’re good enough to sell your skills without giving a cut to a thieving employer, you do have a shot at earning more than you would as a salaried employee—but you also do that at a greater risk to yourself, because you’ve got to fork out the money to pay for all of your own operating costs.

For instance, if you’re a photographer, you’ve got to pay for all of your equipment yourself, which translates to thousands of dollars. As a graphic designer, you’d better make sure you have all the necessary software like Photoshop and InDesign.

Even the most bare-bones freelancers usually have to pay for an internet connection and a functioning laptop. I get a heart attack each time my laptop breaks down, because having to replace it could mean my earnings for the month take a significant hit, yet I can’t afford to wait a month or two as it will affect my ability to work.

If you’re a freelancer, make sure you make a claim for business deductions when you file your income taxes at the end of the financial year. This is something lots of self-employed people forget to do!

If you paid some money to hire someone to help out with your work, incurred any costs advertising your services, had to pay for transport to travel to a client meeting, paid for a phone line clients called you on or replaced the laptop you use for work, you can make a deduction to reduce the amount of income tax you have to pay. Here’s a more complete list of allowable business expenses according to IRAS.



When you’re stuck working as a salaried employee, one thing you take for granted is the fact that you’ve pretty much got a built-in professional network, and it’s easy to get to know new people in the industry, whether at drinks with your colleagues who then invite their own friends to join in, or getting sent for conferences or seminars where you get to hobnob with other professionals while trying to clean out the free buffet.

But after a few months of working from home, you’ll start feeling like a caveman. If you’re the kind of person who used to go home straight after work every day, you’ll soon discover that it’s totally possible to stay at home alone for weeks on end, which is not only boring as hell but could also be career suicide.

You’ll need to make a conscious effort to schedule time in for socialising and networking. For some people, that could mean attending rather dubious-sounding networking events, which may be necessary if you’re a property or insurance agent and need volume.

If you’re more outgoing and have a big social circle, you can get away with simply being more sociable than usual. Instead of always sticking with the same gang, make the effort to expand your circle and reach out to people you wouldn’t ordinarily have gotten to know, whether by taking up new hobbies or attending events. I’ve definitely found myself increasing my social spending, partly because when I was working there were some days I’d just be too exhausted to even go out after work.

Believe it or not, I’ve managed to get job leads from people in my yoga class and friends of drinking buddies. As a freelancer, you’ll go through periods where you have way more free time than salaried employees. Make the most of that time to do something other than brooding in your cave.


CPF contributions, medical leave and vacation time

Back when I was an employee, I always found myself nodding a little too enthusiastically whenever I was asked if I needed an MC during a doctor’s visit. These days, my response to the well-meaning doctors is, “I wish”.

When you’re a freelancer, falling sick doesn’t mean you get to rest at home, away from the watchful gaze of your annoying boss. It means that you not only have to foot your own medical bills, because you have no company to claim medical costs from, but also that you’re unable to work—and that unfinished work is going to snowball to tomorrow, or the day after, or whenever you finally manage to get out of bed without puking.

Vacation time is also a prickly subject, as deciding “not to work” for a week or two basically means you don’t get paid. For the past few years, I’ve always taken my work with me on vacation, or made myself squeeze two to three weeks of work into one week just to free up time for a holiday. You may have the flexibility to go on vacation whenever you want, but that comes at a price.

And while you might not have to lose a big portion of your salary to CPF contributions, you lose out on the employer’s portion of CPF contributions, which are given free to salaried employees.

What other costs should freelancers look out for? Tell us in the comments!

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Joanne Poh

In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.