Insurance, Retirement, and Vacations

The benefits that come with a full time job are health insurance, a retirement plan, and paid vacations. As a self-employed individual, you have to provide these benefits to yourself. Do not shortchange your health and future by going without.

The first benefit you need for yourself (and family) is health insurance. You are no good to anyone if you are too sick to work. What I recommend, and have for myself, is a high-deductible major medical policy. The premiums are affordable because you pay for most expenses out of pocket. The insurance only kicks in when you have a serious condition that requires expensive procedures. If you are in good health, your annual check-up and incidental costs will be much less that the premiums on a plan that pays for everything. The insurance can be coupled with a health savings account that you contribute to tax free.

If you have dependents, you should also have term life insurance. Term is straightforward and low cost. It pays a defined amount upon your death, and you pay a defined amount each year for the term (10 years, 20 years, whatever).

The next benefit you should set up is an IRA. Most investment companies will guide you through this very simple process. Your contributions to the IRA are tax deductible.

Taking vacations is vital to psychological health, especially for creative people. The stress of working extra hard before going away, and getting caught up again when you get back, is worth it. Everyone needs time to recharge. Working vacations have their place, but at least twice a year get away from work completely. Don't forward your calls and email. Make vacations part of your annaul budget, and charge enough during the rest of the year to fund these getaways.

The next form of insurance you'll want to consider is disability. Social security alone will not allow you to continue your current lifestyle should you become too ill to work. Interview insurance agents until you get an affordable rate.

Business insurance is not always required, but is a good idea. You can sometimes put a rider on your home insurance policy for business equipment in your home office. You should also look into business liability insurance. Some companies will require you to have it before they will work with you.

If you can find one insurance agent or company to handle all your policies, it sure is convenient and valuable. And you become a valuable customer to them.

Your hourly rate is much higher than someone working full time with benefits for the above reasons. You have the responsibility and privilege of taking care of yourself.

For a more in depth look at these topics, I suggest reading a book by Suze Orman.