How To Earn "More Money" As An Independent Contractor

The government estimates that roughly 31% of the American workforce are independent contractors. Meanwhile, Intuit did a study a couple years ago saying that 40% of the American workforce, or ~60 million people will be freelancers, contractors and temp works by 2020. Well, it's 2021+ now and more people want to know how to be a rockstar independent contractor than ever before thanks to the global pandemic!

It's clear the trend towards independent contracting / freelancing is on the rise thanks to technology and the Internet. Company benefits like pensions and 401k matches, are also declining. Finally, everybody wants to be free from the constrains of full-time work.

79% of independent contractors say they are happier working on their own. This is according to the 2019 edition of the State of Independence report from MBO Partners, a business services company focussing on the self-employed.

As someone who unexpectedly consulted for the financial technology industry over the past seven years thanks to my site, I strongly believe independent contractors will overtake full-time employment in the near future. Furthermore, you can actually make a lot more money as a freelancer than a full-time employee if you pack your schedule.

Benefits Of Being An Independent Contractor / Freelancer

Here are all the benefits of being an independent contractor / freelance worker.

1) You have more freedom to do work that interests you the most.

Freedom to choose is probably the most desirable benefit of contracting. You are more nimble to choose work that interests and matters to you most. Whereas if you have a full-time job, chances are that you're stuck doing the same old thing over and over again until you bang your forehead bloody. Of course your ability to choose is limited by your ability to produce. However, if you develop a long enough contracting career, you'll have plenty of new opportunities.

At my old finance firm, I wasn't able to make any outside money without disclosure. As a contractor now, I can help a financial tech company's content marketing initiative, start a tennis coaching business, do a little Uber driving along the way, and consult with readers on their personal finance problems. If I was working full-time, I would probably be prohibited from doing such things, or at least I would be under intense scrutiny.

2) You should be able to command a higher hourly rate.

Because contracting work is much more nimble, companies can pay a higher price to a specialist who does specific work. I estimate a contractor can charge anywhere from 30%-100% higher hourly, weekly, or monthly rates on average as opposed to full-time work because the company doesn't have to pay any benefits such as health care, 401k, paid vacation, and tuition reimbursement.

There was one point where I was earning $30,000 a month in freelance income from three different companies. I was able to do so by selling my services to the highest bidder. The companies gave me a lot of flexibility regarding when and where I had to work.

3) You have more flexibility to work wherever you want.

When I used to contract for Personal Capital (best free wealth managment tool you should use) between Nov 2013 – Nov 2015, I would average two days a week. It was the perfect balance at the time because I started becoming restless after working at home for 1.5 years on my own.

Of course not all independent contracting jobs provide this type of flexibility. But if you have a contracting job that deals with information, communications, analytics, and content, you should be able to do your job wherever there is internet access.

Based on my experience working in financial services and in financial technology for the past 15 years, I dare say that all of our jobs can be done remotely. Being in the office can actually be counterproductive. There are so many meetings, and meetings about meetings that it's hard to do anything. I'm most productive in a quiet space writing and implementing strategy.

4) You get to work on your passion projects.

Let's say you love fluffy Corgie puppies. Your dream is to start a puppy daycare center. If you're working full-time, you simply can't adeptly launch your business due to time restrictions and perhaps legal restrictions. But if you are contracting, you can take on contracting hours around your puppy daycare business.

Financial Samurai is always going to be my passion project. It makes a good revenue stream and it's a lot of fun to experiment with new content styles. Furthermore, bantering with folks all around the world is pretty fun. In the 6th grade, when I was in Malaysia, I started writing penpal letters to kids in different countries. Financial Samurai is an expanded extension of one of my childhood hobbies.

Related: The YOLO Economy Is Here To Stay

5) You get to spend more time with family and friends.

My grandmother passed away during my second year of work out of college. I went back home to Hawaii earlier in the year to cheer her up after she had a stroke. I was with her by her hospital bedside when she passed away that evening. It almost felt like she was waiting for me to say goodbye before she left us.

Her funeral was a couple weeks later, and I didn't attend because I felt pressure to stay back and work. I had already gone for a week. I wrote a letter for my father to read at the funeral.

Now that I'm older, I realize that I should have flown back out or just stayed in Hawaii for a couple more weeks to support my father and relatives. I'm afraid of funerals due to all the sadness I envision. But maybe a funeral is a time for remembering all the good a person has done to positively affect all our lives.

How To Be A Rockstar Independent Contractor / Freelancer

Part of the reason why I wanted to be a independent contractor was so that I could write this post based on a couple years of contracting experience. I was able to successfully negotiate a severance package that provided for six years of living expenses in 2012.

As a result, I could explore a new industry other than traditional finance. Nobody should ever quit their jobs since you won't get a severance, COBRA healthcare, and unemployment benefits if you do. Read my book please!

Here are some tips to follow if you want to be a rockstar contractor who always has work lined up.

1) Add value, but respect your colleagues.

Adding value is always a good thing. Adding value in a new arena where they didn't expect you to add value is even better. But you also have to be careful and shut your mouth if you dislike something or think their way of doing things is wrong. Advise without judgement.

My biggest problem is that I "wear my heart on my sleeve" all the time. This is actually a good answer when an interviewer asks, "what is your biggest weakness?" I am very opinionated when I believe in something or think something is going down the wrong path. As a result, I may rub people the wrong way if I don't agree. This is almost always how conflicts start at work. Sometimes it's best to just STFU and make other people happy.

Before opening your mouth to add your two cents, think to yourself whether the greater good is achievable if you are going to undermine someone else's authority. Even if you are right, if a colleague believes you're throwing them under the bus, they will make it their mission to discredit you. It's easy to do so because after all, you're a contractor and not a full-time employee. Provide balanced advice when asked, but don't push your opinion onto others.

Must read: Are You Smart Enough To Act Dumb Enough To Get Ahead?

2) Know your place.

Rightly or wrongly, contractors are not treated the same as employees. Employees have full-time benefits, get gifts, attend private events, and so forth. As a contractor, you shouldn't expect any sort of full-time employee treatment.

If there is a company milestone celebration where everybody gets a nice dinner gift certificate for two, you will probably get zilch. Don't cry. That's just the way it is. Remind yourself about all the benefits of being a contractor.

I find it very easy to be part of the team, whoever I contract for. Then, it's the occasional meeting I see everybody in, where I'm not invited that reminds me of my place. Not knowing your place can get you in trouble. You start presuming things will happen that are not relevant to you. For example, I was once told not to use the words "we" or "our" in my writing because I'm not a full-time representative of the firm. That hurt, but that's just part of being a contractor.

Just like loving someone more than he/she loves you will cause problems, caring too much for an organization as a contractor may lead to your downfall. You can end up despondent like an adopted puppy who always wonders why his mother feeds the other pups first. Align your interests with your clients and everything will be alright.

Related: Cultivate Your X-Factor If You Want To Be Rich, Happy, And Free

3) Manage expectations aggressively.

When I first started contracting, I worked about 35 hours a week for 24 weeks in a row. This was despite only being paid for 25 hours a week per my contract. I wanted to over-deliver in order to ensure that my contract continued every three months.

There was even some hope that I would perform so well my first six months that I might even get a raise. I didn't. Then I re-aligned my work hours to what was agreed upon in the contract. I took a risk, and lost. At least my contract continued for another year.

My father even told me when I was in Hawaii for 10 days one time, "Are you sure you're just working several hours a day? Because it sure looks like you're working all the time!" He reminded me of my workaholic tendencies, and the importance of setting limits.

The hours you spend working while not getting paid are hours you could spend working for another client and getting paid. You're not a full-time employee with the luxury of always getting paid no matter how much or how little you work. Your time is your business. You must set boundaries in order to keep your sanity, maximize your profits, and stay happy. I now use an out of office notification when I'm unavailable to contract or I'm pushing my hourly limit.

4) Never stop networking.

Once you start contracting at a particular firm, you will inevitably receive a lot more inquiries from other firms in the same space. If you do good enough work, people will take notice. They will learn about you through word of mouth, meetups, through your online profile on LinkedIn. Go to all happy hour functions when they are allowed again. Attend client events when you can. Never stop networking at meetups. There's this virtuous FOMO effect where other companies want to also hire you once they see what you're up to.

I've received a half dozen inquiries from other companies for my services that I've turned down in 2018. Feel free to contract with multiple companies at once. You don't get benefits, so you have every right to earn what you can to pay for your expenses and save for retirement.

In 2019, I worked on a massive six figure blog marketing campaign for one of the largest financial companies in the world because a colleague of mine from 2015 moved there to run digital marketing. You just never know where your contacts will end up, so it's good to always keep your relationships friendly and fresh.

Your professional network is extremely important.

5) Know your worth.

Before highlighting your rate, do as much market research as possible beforehand. It's an unnatural feeling to charge by the hour, day, or week if you're used to getting paid based on an annual salary. My sense is many contractors undercharge what they are truly worth.

They forget that because a company doesn't have to pay benefits, it is saving roughly 30% by not hiring you full-time. As a result, you should charge at least 30% more for your services to make up for the lack of benefits, if not much more.

After you do your market research on how much you can charge, you must do an honest self-assessment on your experience and the value you can provide. The market will tell you whether you are charging too much when nobody responds, or too little, when your inbox gets flooded.

6) Be grateful for the opportunities.

Never speak ill of your clients. Always be grateful for the opportunities you've had. Whatever field of work you're in, know that the circle is very small. Everybody knows everybody, or is at most three degrees of separation away. People also seem to change jobs every three years on average nowadays. You never know where someone might end up.

I had a disappointing experience after I sent my good-bye e-mail to a team of writers I hired for a client. Only two out of five responded with a "best of luck" or a "thank you for getting me onboard." Guess who I recommended management keep after I left? You got it. The appreciative ones. Always be thankful because there are plenty of people out there with less, or who want your same opportunities.

Don't Be Afraid Of Independent Contractor Work

When I was working a day job, I thought being a contractor was a risky proposition because I wasn't confident in what I had to offer. As a result, I wondered how I'd pay for health care, earn a steady paycheck, and save a good amount for retirement.

The truth is there are varying degrees of contractor quality, just like there are various degrees of full-time employee quality. If you're a coveted employee or contractor, you will always have opportunities that pay handsomely.

If you're able to properly network and manage your time, you can earn a lot more as a contractor than if you were a full-time employee. You've also got maximum flexibility to work on all sorts of jobs.

At one point, I was making $30,000 a month as a contractor! Every single one of my clients have paid me hourly rates equal to well over $200,000 a year.

Health care is the biggest concern. But all you've got to do is pay for it, to the tune of $300 – $700 month, depending on your plan. The expense also becomes deductible.

Brand Yourself Online Today

The #1 way I've been able to consistently get independent contractor work is by having this website. My financial technology clients all found me through Financial Samurai and liked the quality of my writing enough to hire me in their content marketing departments or as an affiliate consulting. Your website can be about anything you are passionate about, which will inevitably attract you to more of the right clientele.

Starting Financial Samurai in 2009 was the best thing I could ever have done. Never in my wildest dreams did I imagine making enough online to not have to work a day job just three years after I started. If I want to make more income in retirement, I can simply reach out to my network and let them know I'm available as an independent contractor.

Below is a real income statement of a professional blogger who makes ~$900,000 a year from his website, but earns another ~$100,000 a year from consulting gigs all thanks to his site.

How much you can make blogging - 1 million pageviews a month

Recommendation If You Want To Quit Your Job

If you want to quit your job and become an independent contract, I recommend everybody negotiate a severance. If you negotiate a severance like I did back in 2012, you not only get a severance check, but potentially subsidized healthcare, deferred compensation, and worker training.

Since you got laid off, you're also eligible for unemployment benefits. Unemployment benefits can range from 27 weeks and up, depending on the government. Having a financial runway is huge during your transition period.

Conversely, if you quit your job you get nothing. Check out, How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye, on how to negotiate a severance. I first published the book in 2012 and have recently expanded it to over 200 pages with new resources, strategies, and additional case studies thanks to tremendous reader feedback.