One thing that many people have asked me is how my life has changed financially. Yes, I am still making a good income each month, but I have lost my stable day job income that I was earning.
Almost everyone that I talk to about starting my own business has asked me how it has been losing my day job income and the benefits that came from it.
Well, there are many changes that happen when you leave your day job. Below are some things that may happen.
You will need to pay for your own life insurance.
When I had my day job, I received a small amount of life insurance that was fully paid for by them. It was nothing life changing, but it was around one year of expenses.
We still haven’t looked into life insurance, even though neither of us have any. I’m not even sure what the average couple without children pays for life insurance. Genworth does have a life insurance calculator to check out. How much do you pay?
Read: 3 Insurance Policies Everyone Should Have.
You will need to pay for your own health insurance.
Health insurance is something that I lost when I left my job. And boy, is it expensive to buy your own! For now, we have very minimal coverage but plan on changing that within the next few months.
I have never had to pay for my own health insurance before. I had health insurance up until my father passed away (I was 18). Then I went 2-3 years without health insurance (I was young and broke!), and then when I started working at my day job I received nice health benefits which were paid entirely by my employer.
Paying for health insurance when you never had to before is definitely an eye opener.
You might need a larger emergency fund.
We have always had a good amount in our emergency fund, but now that I am self-employed, we have built up our emergency fund much higher. You never know when something may happen, and having a well-funded emergency fund can protect you if something actually does happen.
How much do you keep in your emergency fund? Do you determine it based on your career?
You will need to prepare for taxes.
Oh taxes. These are just so much fun! You might pay 15% in taxes, or you may be paying 40%. Each situation is different, but taxes are never a positive of starting your own business. You need to make sure to keep very good record of everything money related.
Where would you see changes? If you work for yourself, what changes have you experienced?
Photo by Alan Cleaver via Flickr