My motivation for focussing on financial independence is that I’ll have more time to spend with my children while they are growing up and also have the freedom to work when I want to. I enjoy working – I even throw myself into it in tough times, and I’d go potty without feeling like I’m being productive and learning new skills, but I also appreciate flexibility and being able to work on my own projects.
I’ve had a vague goal to change my working pattern once the kids are in school but I haven’t put exact dates on it yet. My daughter starts school in August this year and from April next year my son will be old enough to join the preschool at her school. Around this time our nanny will be moving back to her home country so I think this is the perfect time for me to take the leap.
However, given that I currently have no substantial side income other than our rental property, this means that within the next year I’ll need to build up other income streams that can reliably cover my contribution to our living costs. As I mentioned in my last post, we have now technically reached “Coast FI” so if I can’t afford to put additional money aside to invest we should have enough for retirement from around 60.
So, in order to cover our basic costs, without childcare costs and factoring in our rental income I would need to bring in £600 a month after tax to cover our fixed costs. This breaks down into:
- Living costs of £2700 (minus food, which my partner pays), minus:
- Rental income of around £500 after tax; and
- Contribution to costs from partner of £1600
- Equals : £600 after tax
If I’d like to continue to save to meet my ISA allowance, or spend more on holidays or experiences, I’d need to earn £1600 more.
£600 a month after tax to cover basic costs is a lot more achievable than I thought, even starting from £0 now. My most feasible and profitable route to working freelance would probably be as a consultant in my current field and people with similar levels of experience can charge at least £750 a day now, so on that basis I could survive by getting one or two days of work a month.
Another thing that gives me comfort is that our emergency fund could, in theory, cover almost 3 years of this £600 a year deficit. As I write this, I feel a bit silly. I could quit now! I do value this financial stability though and I’ve made sacrifices over the last years to stay in my career and build up our savings, so I do want to make this transition in a smart way.
Here are my plans for being in a position to quit my job, if I want to, in a year’s time:
- Build up my network and profile in my industry and invest in developing existing relationships so that I am a trusted advisor when I do go freelance
- Take advantage of all learning opportunities in my current role – see challenging projects as future credentials
- Create passive income streams through experimenting with different products (I have a plan for a new Etsy store leveraging my partner’s digital skillset) and developing any that stick
- Build a repertoire of reliable and flexible “time for money” gigs that I can fall on in quiet months, such as proofreading (and get necessary qualifications/training for those). Based on working 4 hours a day, these would need to pay about £10 an hour before tax.
- Develop new digital skills through side hustles that could I could “talent stack” with my professional experience (such as creating eLearning in my field, which combines technical skills, content knowledge, creativity and the narration aspect that I enjoy)
- Explore opportunities to get coaching or join groups of like minded people to keep me accountable and address confidence issues as I prepare for this next step
- Continue to prioritise my relationship with my children and make the most of the time we do have now (so that when I have more time to spend with them they actually want to spend time with me!)
- Develop healthy habits to keep well and happy, like early bedtimes, regular exercise and reduced screen time
- Pay a decent amount into our workplace pension to make up in part for the years that I may not be able to contribute. I currently contribute 5% and my employee 6% but this will go up to 10% by my employer in three months and I will probably also increase my contribution to 10%.
As a household we are quite dependent on my income and nervous of making any changes in this climate. However, having more time as a family over the course of the pandemic has shown me how much I have missed and I want to make the most of the next few years.
I’d love to hear from anyone who is considering a similar move or has successfully done this. Are there other steps I should be taking or any tips you could give for income streams I could build up to this monthly amount within a year?