The Ins and Outs of Self-Employment and Working from Home

In Ask the Simple Dollar, I answered a question from Tammy on the drawbacks of self-employment. In my answer, I said that this could honestly be a lengthy article on its own.

Whenever I try to tackle big broad questions like that in a fairly short mailbag answer, I usually end up getting questions from readers, and this was no different. People wanted to know many things about the ins and outs of self employment and working from home. How does one stay motivated? How does one stay focused? How does one maintain professional contacts? How does one build a “line” between personal and professional life?

Here’s the reality: I’ve been working from home, either in a self-employment situation or in a full-time contract situation, for the past eight years. Along with that, one of my closest friends also works from home and we’ve discussed our relative experiences quite often. I’ve learned a lot about what it takes to make working from home work.

Here are some of the most powerful things I’ve learned over those years, either by trial and error or by reading or hearing advice from others.

Self-Motivation Is an Absolute Requirement

If there’s one single piece of advice that I would give to anyone who is considering self employment or a work-from-home situation, it’s that self-motivation is an absolute requirement. Period.

When you work from home, you simply don’t have a manager watching over your shoulder to make sure you’re working. You don’t have coworkers checking on you all the time and noticing whether you’re working or doing nothing. You no longer have to hide it when you’re wasting time because there’s no one there to watch you. There are no web site blockers. There are no supervisors. There essentially isn’t any structure.

For most people, that sounds like a really good thing. Not having bosses around to hover over your shoulder sounds wonderful, right?

The truth is that for some people, such a lack of supervision is a disastrous thing.

Why? Just because the boss hovering over your shoulder goes away doesn’t mean that the deadlines or the responsibilities go away. You’re still expected to take care of every bit of work that comes your way, whether assigned by your boss or agreed upon with a client. You just no longer have anyone motivating you to do this besides you.

In the absence of that constant motivation of a supervisor, many people can find themselves falling into disastrous habits and routines. When you start allowing yourself to spend an hour playing a game, or when you start moving your household chores to the middle of the day but then also taking the evenings off to hang out with friends, you start to fall behind on your work. When you have a big deadline that’s looming but still a bit far off on the horizon and you choose to spend part of your workday on World of Warcraft or binge-watching Sense8 on Netflix, you’re going to fall behind on that project.

And as those comforting, fun routines become normal, you begin to establish a pattern in which it becomes very difficult to get your work done. And when you’re not producing the work you’re supposed to and you’re not in the office to defend yourself… you begin to look pretty ripe for downsizing.

You have to be self-motivated. If you’re of the personality type that plays while the boss is away, you should strongly avoid self-employment or work-from-home situations.

You Need a Strong System for Keeping Track of Things You Need to Do

If I did not have a strong task management system in place – one that I constantly used throughout the day and refined over time – I would simply not be able to keep up with working from home.

Here’s why: My to-do list is essentially my supervisor.

When you work from home without a direct supervisor in place, you effectively have to act as your own supervisor. You have to be able not only to produce good work, but also to make judgment calls about what work needs to be done next.

Those are two completely different skill sets. Your working skills are really not all that different than working in an office. You’re producing things in a regular fashion as is expected by whatever the terms of your employment agreement are.

However, in an office environment, if you’re stuck on what to do next, you can just turn to your supervisor. Your supervisor is essentially a smart to-do list, in a way. He or she can inform you what tasks need to be done next.

When you work from home, you have far less guidance from an external supervisor, if you have any at all. So what do you do if you’re not sure what to do next? The truth is that you have to be able to step back, look at the big picture, and figure out what’s next. In essence, you have to be your own supervisor.

I find that, for me, switching between the two modes all the time isn’t really very productive. I find it much easier to spend a portion of my day in “supervisor” mode and another, larger portion in “worker” mode.

What I typically do in “supervisor” mode – which either starts the day or takes place at the end of the previous day – is evaluate what the next steps are on everything that I’m currently working on, then prepare a very clear to-do list so that I can complete those tasks in a logical fashion. I have been using Todoist for this for a while, though I recently began to migrate (back) to Remember the Milk.

When I’m actively working on tasks – in “worker” mode, in other words – I’m not thinking at all like a supervisor. I’m just trying to burn through my to-do list as efficiently and sensibly as possible. If something comes up that indicates something that I need to take care of, like an email from a client or something, I jot it down for quick reference later when I switch back into “supervisor” mode.

In other words, I separate the “deciding what needs to be done” aspects of working from home from the “actually doing stuff” aspects.

Everyone needs a supervisor when they’re working. The trick is figuring out how to be your own supervisor when you’re working from home. For me, keeping the roles fairly separate and using a to-do list makes this all work out quite well.

You Have to Look Out for Number One and Assume Other People Won’t Always Be Ethical

Over the last 30 years, the working world has changed significantly. A person can no longer truly believe that their employer will be there for them for the rest of their working life and that a safe retirement will be waiting. That ship has sailed.

Workers today need to look out for themselves. They should be planning for their own retirement with individual retirement accounts. They should be keeping their resume prepared and ready to go. They should be ready to walk away from situations that treat them unfairly.

This is doubly true when you’re self-employed and working from home. Your reputation and professional standing are entirely up to you and no one else. It’s up to you to make sure you’re keeping money out for taxes. It’s up to you to read the contracts. It’s up to you to save for retirement. It’s up to you to be preparing yourself always for the next step in your career path, whatever it may be.

Here are a few specific pieces of advice.

One, never accept work where the full payment comes after the delivery of the work. It becomes very easy for the person or group for whom you worked to simply disappear. You should expect up-front compensation, at least in part, for the work that you do. You can be a little looser with this if you have a long-standing relationship with this person or group, but if it’s an unknown entity, you should expect at least some compensation up front.

Two, everything you’re doing should be a resume-booster. You should look at all of your work not only as a tool for fulfilling your contracts and work requirements, but also as a way to build out a resume. You should be building a social media following if at all possible. You should be building skills that are resume-worthy when you take on projects. You should be completing things you would be proud to have on a resume. Ideally, you want to be in a situation where you’ve achieved so much that it doesn’t really fit on a single page. You want to be in a situation where plenty of people have heard of you and your skills and talents are in demand, where opportunities start coming to you instead of you needing to chase them down.

Three, whenever you’re paid with pre-tax money as a contractor, take half of it and put it aside for taxes right off the bat. Don’t even blink an eye about this. If you get a $5,000 check, take $2,500 and put it aside for taxes immediately. You don’t have anyone putting this aside for you if you’re a contracted employee. It’s up to you to take care of this, and if you don’t do it now, you are going to be in a real bad position come next April.

Four, have the biggest emergency fund you possibly can. Sometimes, contracts will just dry up whether you expect them to or not. Sometimes, you’ll be flooded in work and sometimes you won’t be. The best way to survive this is to just keep as much cash as you can in your savings account. I advise three months of living expenses for your family plus one more month for each dependent you have. If you don’t have that, you may find yourself in a real pickle if the opportunities dry up for a little while.

All of this comes down to one thing: watch out for yourself. No one else is going to.

If You Take Advantage of Schedule Flexibility, That Time Needs to Be Recovered

I’m the first person to admit that I take a lot of advantage of my schedule flexibility. As I write this, I have a load of laundry running in the laundry room. Earlier today, I went out for a long lunch with an old friend. A couple of weeks ago, I went to a daytime meetup and essentially got nothing done during that day. I’ve also spent days with my children when they’ve been home sick recently.

That schedule flexibility is great, as is the ability to seamlessly intertwine professional and household tasks. However, the reality is that non-work tasks eat up time, and that time is time taken away from what you need to get done.

I have enough on my plate most of the time that it eats up about 45 hours a week. Most of the time, I handle this by working about nine hours a day on weekdays. Sometimes, there’s more work to be done than that; on occasion, I have less to do. The average is about 45 hours.

Now, let’s say that I spend an hour each day doing household chores. Great, household chores are done, but then there’s five hours of work that’s undone. That time needs to be made up.

It’s easy to make up a few hours. I can make those up by getting up early on the weekends and doing what I need to do before anyone gets out of bed.

The problems come in when I borrow too much from my week. If that happens, I might need to sacrifice a Saturday afternoon or a Sunday afternoon to work, which means time away from my family, something that I loathe.

The other option, of course, is to push that extra work into the following week. Usually, that’s an even worse option as it risks missing deadlines and putting too many hours into the following week when, inevitably, a disaster will occur. I’ve learned the hard way over the years that “putting it off until next week” usually means that next week will bring a sick child or an emergency home repair or a great opportunity that I’ll regret missing out on.

The key thing to remember here is flexibility does not mean time off. It just means that you have some control in terms of moving your exact work hours around. It does not mean that you now work less hours, because if you take that route, you will fall behind.

It Can Get Lonely

There are times when I relish the quiet and solitude of the house. I can just shut off distractions, bear down on my work, and get things done. It’s one of the real perks of working from home.

Still, that perk has a drawback. There’s very little social interaction. There’s no one to go grab lunch with. There’s no one to bounce ideas off of on the spur of the moment. There’s no one to meet up with at the water cooler.

There’s a big social aspect of a normal work environment that disappears if you work from home. The ease of interacting with coworkers disappears almost completely. For some, that may not be a big deal, and it can even seem welcome at first, but there are times where the social interaction is really useful and valuable, both professionally and for personal well-being.

Over the years, I’ve found a few great substitutes for this that really work for me.

One, I sometimes co-work with other people who work from home in the area. We’ll either go to one another’s house or meet in a neutral place, bringing our laptops along. Usually, we just treat this as something of a brainstorming session, where we bounce current work projects and ideas off of each other and look for new perspectives. The conversation usually weaves through our various projects and into other areas as well. This actually ends up being a powerful technique not only for socializing, but for renewal of my perspectives and energy and for my ideas, too.

Two, I participate in a Slack channel with several other stay-at-home workers in my area. Mostly, we just use it to joke with each other, talk about current events, get feedback on something we’re working on, or set up face-to-face meetups.

Three, I engage in a lot of face-to-face social things in my spare time. I participate in several community groups and I have a fairly large social network of people that I see face-to-face reasonably often. This helps make up for the “social shortfall” from my work day.

If You’re Married, You Need to Communicate Clearly with Your Spouse

This section is perhaps as much for the spouses of people who work from home as it is for the workers themselves.

The reality is that having one spouse work from home while the other does not can create a lot of friction if there’s not clear communication. The reason for that is simple: Both spouses tend to see the grass being greener on the other side.

Take my wife and I, for example. She often perceives my job as being one where I can basically just stop working whenever I want and do whatever I want. However, in focusing on that flexibility, she loses track of the challenges – that I have to define my own work tasks, that I have to make up for the hours that I “flex” elsewhere, that there are social challenges, and so on.

On the other hand, I often see the positive aspects of her job. She has a lot of camaraderie with her coworkers. She has a pretty pleasant commute, all things considered, giving her time to unwind while listening to audiobooks and calling friends and family other things that I simply don’t have (working from home often means virtually no “unwinding from work” time). She also rarely has to deal with family crises – if a child is sick or needs something for school or there’s a problem with the water heater, I just handle it, period. Yet, at the same time, she doesn’t have the flexibility to do some of the things she’d like to do.

These issues can cause friction if you allow them to fester without communication. They even sometimes cause friction between Sarah and myself, leaving each of us, at various times, feeling unappreciated.

Don’t be afraid to talk about these things. Lay them out there in the open. Listen to your spouse when they’re talking about the challenges they’re having with work and look for ways to address both of your needs.

Always keep in mind that you are a team. You should be working together to make sure that the negatives that you both perceive from your life are minimized and the positives are accentuated. If one of you feels the need to be more social while the other one is worn out from a day in the office, let that person go out and socialize. If one of you is frustrated because of an inflexible work situation, the other one should step in and help give that person access to the things they’re missing if at all possible.

Communication is at the root of all of this. If you’re finding that there are things bothering you about your spouse’s perception of your work and work schedule, say something about it. If you can’t talk about it seriously, then there are signs of deeper marital problems that should be addressed with the help of a professional.

Final Thoughts

Work-from-home situations, whether self-employment or telecommuting, can be fraught with professional, personal, social, and financial challenges. Although the flexibility is a wonderful thing, the other aspects of working from home can be quite difficult to work through.

If I can boil all of this advice down to two words, those words would be organization and candor. Be organized with your time and your money and understand that you’re both a supervisor and a worker. Be candid with yourself in terms of the challenges and with your spouse as you work on the challenges of this professional route.

Is it worth it? I would say yes, only because of the benefits that my professional choice has brought into our lives. It’s enabled our children to have a parent hug them as they go out the door to school each morning and be waiting with a snack when they get home. For us, that adds up to enough to deal with the other challenges that working from home can bring.

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Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.