Part of our continuing series on the fears that hold people back from being self-employed.
What if I don’t make enough money?
Here’s something to consider: if you currently work for someone else, you probably aren’t making as much money as you’re worth.
Think of it this way: if you work for a salary, you are effectively selling your time at a bulk discount.
To make the math easier, let’s say you make $50,000 a year at your job. (I’m always in favor of making the math easier.)
A good living, right? After all, median household income in the U.S. is $53,000. So $50,000 is a pretty decent middle class income.
But to get that $50,000, you need to put in 2,000 hours of work. So for each hour, you’re getting paid $25 (before taxes). And look at how little you have left after taxes – let’s say you pay 25% of total income in taxes (federal, state, local). That leaves you with $19 an hour. So every day for eight hours of work, you take home $152. (This doesn’t include the various withholdings for health insurance and other benefits – like I said, I’m all about making the math easier.)
But here’s the thing – what if you were self-employed and had the flexibility to take on multiple, smaller projects that paid more – much more – per hour?
It seems to me that with the way the job market is going, it’s easier to get more than one job than it is to get “a” job. It’s easier to find multiple smaller paychecks on a project basis than it is to find one “old-fashioned” salary-and-benefits job.
Some people see this situation and feel nervous and insecure – “what if I can’t find a job?”
But I think, in the future, more people are going to embrace this reality and see it as an opportunity. You don’t need “a” job anymore – the Internet makes it easier and more efficient than ever to find multiple (smaller) project-basis jobs. (And if you’re good, you can charge a much higher hourly rate for your work than you used to make at your salaried job.)
If you’re salaried, there’s a ceiling on how much you make in a year. Your salary is set in advance, you put in your 2,000 hours, and unless you’re the CEO, your annual pay raise will barely keep up with inflation. The big boys at the top make the big bucks and the rest of us scrape by.
If you’re self-employed, you have the freedom and flexibility to adjust your market value as you go along. You can take more work when you really need it; you can turn down projects if you’re swamped. You can make as much money as you want. You’re not bound by the artificial constraints of 2,000 hours a year.
The more I think about this, why would anyone NOT want to be self-employed?