Self Employment Vs Employee: Which Actually Provides More Financial Security?

Is it better to have a full-time job or be self-employed? What about retirement? Health insurance? How does a person who has been self-employed for 2 decades look at all this?

Self employment vs employee. This is a discussion my wife and I have had many times.

A lot of articles on the subject end up becoming more of an article on tax implications. But, I’d like to talk about the personal side of this.

I’ve been self-employed ever since college. I’ve literally never had a job since. So, I’d like to give my perspective on this and the real-world implications.

Years ago, my wife wrote a blog post about what it’s like having an entrepreneur as a husband. Unfortunately, that post is no longer online (she took her blog down). But, she asked me about how I plan for my “golden years”. In other words, am I planning for my retirement? Do I worry about not having a pension plan or a 401(k)? Do I worry about not having a steady paycheck?

In her blog post, she said (and this is the one quote I have from her original post):

So I guess part of me does feel somewhat insecure about having a blogger for a husband.  I do think about what it will be like when we get old and have no 401k or any other income to fall on, I think about the $2500 we have to shell out of our pocket before the health insurance kicks in if any of us gets sick.  I think about the economy and how it is going to affect our small business.

This post was originally written in 2008. It was in the thick of the economic downturn. It was also before Obamacare kicked in. The idea of having only a $2,500 deductible on insurance is pretty laughable for us now.

She also mentioned my small ordeal in getting approved to buy my first house. This is true. In retrospect, I may have stressed about it more than I needed to, but I did have to jump through a few more hoops to get approved for that mortgage because I did not have traditional pay stubs. Plus, they saw my income (from my tax returns) go from a small amount (due to a college job) to a full-time income even though I was technically unemployed. It didn’t make any sense to them because I didn’t fit the normal template.

Who knows, maybe they thought I was a drug dealer or something. 😉

All of this speaks to the various “downsides” of running an online business and being self-employed. But, are they really downsides?

Today, running an online business and being self-employed in this fashion is, perhaps, more normal than it was back in 2008. But, many of those same concerns can still come up.

Is having a regular job more of a safe bet? Does being an employee provide better financial security?

Self Employment Vs Employee: Is The 9-5 Job Really That Secure?

I think it is an artificial faith to think that having a 9 to 5 job makes your finances more secure.

For instance, if there are uncertain economic times, what if your company lays you off? If you get a 401(k) or other retirement plan, how secure is it really?

There are quite a few people out there who have lost a lot of value in their retirement nest eggs because of the stock market fluctuations. If you need to make more money, what do you do? Beg your boss? Cross your fingers? Kiss the right butt?

What it comes down to is one thing: you are not in control.

When you work for a large company, your financial security is only as secure as that company. And, most likely, that company is not controlled by you. It is controlled by management and is dependent on whether they make the right decisions. And when it becomes necessary to cut expenses, for THEM to make the decisions necessary to see through tough times, who do you think is most susceptible to getting the axe? You are, of course.

On the contrary, when I need to make more money, I can create a new product, run a sale, get inventive. In other words, I can make it happen, on demand. And it is based on one person – me. I have no boss to beg.

So, who is more secure in an economic downtime? The person who has to hope their boss makes the right decisions? Or the boss himself?

Working for a large company, you might think they are so big that nothing will hurt them. Well, remember  General Motors? Seen some of the retail companies that have folded lately? Remember Enron? Big companies can and do fail. They are subject to the same rules as a small business. In fact, many times, big companies are LESS able to maneuver in tough times than a small business.

It is true that a small business can be like a little boat in rough waters. You can get rocked around alot and sometimes much more than a larger company. It can make you feel pretty good when that paycheck comes in every couple weeks like clockwork. But, it works… until it doesn’t. In the end, I believe it is a myth that there’s something inherently more secure about a traditional job. In both situations, you have to deliver value. And in both situations, you’re subject to external circumstances.

Need An Action Plan To Start From Scratch?

This 28-page free report is designed to serve as a guide for how best to spend your available time to start an online business from zero. No “secret tactics”. Just an orderly, logical progression.

What About Retirement?

It’s true. Being a professional blogger or online entrepreneur doesn’t provide a retirement plan. But, I don’t care. Because I realize that there is nothing secure about any retirement plan I might get from a company.

Besides, would retirement be a reason to get a 9 to 5 job? Am I supposed to suffer my way through that slavery for most of my life so that I can sit there and be lazy on a retirement pension when I become old?

No, I can create my own retirement plan – one that I know will be there when I’m older because I have control over everything involved.

A 401K plan has drawbacks. Yes, your employer matches your contribution (free money!), but at the same time, it isn’t really your money until you meet the eligibility requirements to withdraw it. Until then, those funds are subject to every fluctuation in the market and there’s limited things you can do to shelter it from loss.

In the end, I don’t really like having investment vehicles that I am legally not allowed to touch. I’d much rather have control over where I put my money… and when I withdraw it.

As a small business owner, my income isn’t capped by anything other than my ingenuity. Plus, a revenue-producing business can be a good retirement plan of it’s own.

In the end, I think having a retirement plan is perhaps one of the worst reasons to have a traditional job.

What About Health Insurance?

The simple truth is that our healthcare system here in the United States is pretty screwed up. The Affordable Care Act made it much worse, too. This tends to get glossed over in all the political rhetoric about having provided insurance to millions of uninsured, but they don’t mention that that is only because of subsidies. For those of us who don’t qualify for subsidies, insurance costs are utterly ridiculous. My own family insurance went up about 5X because of the “Affordable” Care Act.

So, it is true that in many cases, having a traditional job does make health insurance more accessible. If you’re in a situation where you absolutely need that coverage, then perhaps you have to do what you have to do.

I’m a bit of a rebel, by nature. I’m the kind of guy who questions the established assumptions. And, when confronted with the new “affordable” insurance plans where I’d be spending more money every month than my home mortgage for insurance that would likely never kick in, I end up questioning whether I need insurance.

Truth is, right now we are not carrying health insurance. There are some group options we’re going to look into and we can just buy it on the open market.

I will admit that this idea of insurance used to be a much easier comparison for a job vs self-employment. That’s because, when this article was originally published in 2008, insurance was actually reasonable. But, to be blunt, the Affordable Care Act ruined it.

Entrepreneurs can carry health insurance, but it can be pretty damn expensive.

But, there’s also this viewpoint…

I do not live my life in order to provide protection against sickness. I do not let the small chance of sickness dictate what I do with the other 95% of my life. When I get sick, I deal with it. Group health insurance, where they pay for everything, might give you a warm fuzzy, but jeez, what a shame if you make that the focus of your life.

You can either focus on living or focus on sickness and death. Your choice. The medical industry would love to have you at their beck and call, sell you expensive “treatments” while knowing they can get paid by your insurance company. This whole society focus on health insurance is being SOLD to us as a bill of goods. All it does is turn everybody into good, paying customers.

Yeah, don’t even get me started…

What About the Steady Paycheck?

Some might find security in getting a steady paycheck, every two weeks, as expected. But, look at this:

It’s the same size check. Every time. Life changes. Your paycheck doesn’t. Where’s the security in that?

It’s true – my income changes every month. But, I get paid a LOT more often than every two weeks. Plus, I have the GAME of increasing my income. I CAN make more money if I want. I don’t have to ask for a raise. And, I make more money than most people with a 9 to 5 job.

In fact, one source says that (on average) freelancers make about 45% more money than employees. It makes total sense, though. Any company you work for has to be profitable and pay its own overhead. As a freelancer, it is all your’s.

The Biggest Issue With Self Employment Vs Employee

So far, I’ve mostly just sat here and told you why self-employment is better than having a job. However, we absolutely must acknowledge the downside.

When you are self-employed, you are in the driver’s seat. You have no boss. Nobody there to threaten you if you don’t show up and get anything done.

Now, for some (like me), this is a perk. I would much rather be responsible for myself.

But, freedom comes with responsibility.

And some don’t really like being that responsible. They like the security blanket if having a system they can step into, be told what to do, and just there and execute. Their boss makes the decisions. The processes are laid out for them. And some people prefer that.

You are responsible for your own schedule when you are self-employed. You could work hard… or binge watch Netflix. There’s nobody there to stop you either way.

It takes discipline and self-control to be self-employed.

When you have a job, you’re told where to be and when.

You need to know what works best for you.

Some people might like the idea of being self-employed, but would fall flat on their face because they lack the self-control to actually be in the driver seat.

It’s a Mindset Thing

There is a mindset that our society teaches: to fall in line, keep your head low, work for the paycheck, retire and die.

When you do as everybody else does, it gives a sense of security. And when people decide to go another way, we have people telling us it’s risky. That there is a chance of failure. That we have to work too hard.

The one thing, in this society, that is consistent is that when you stick your head above the crowd, somebody might try to shoot it off.

The first step to success, in many ways, is to DISAGREE with the status quo.

Perhaps it is true that being self-employed just isn’t for everybody. I have a hard time believing that, but it’s true that somebody out there has to screw the lids on the jars for us. But, I believe the American dream is to be your own boss, make a good living, have the FREEDOM to do what you want. And I will continue to remain an evangelist for that lifestyle.

I am happily unemployed.

In fact, I am unemployable. I can’t even imagine having a regular job.

I realize others have different opinions. Some people are more comfortable being in a situation that other people are responsible for. They find security in that. And there’s nothing wrong with it.

I just like to do it my own way. 🙂

Use the Niche Profits Finder to walk you through a
specific process for identifying profitable niche markets.

  • The exact components to what makes a niche profitable
  • The 5 Lists For Profits to identify potential niches which are the right fit FOR YOU
  • The 2-step Audience “Drill Down” to ensure you don’t go too broad
  • 5 Specific Niche Tests to run your ideas through to see if they can be profitable (each test takes less than 3 minutes to do)


  1. This is really powerful. I have been severely unhappy working 9 to 5s for almost a decade and am in the early planning stages to launch a freelance career — which I’ve dreamed of since I was in elementary school. Some people love the 9 to 5, mostly for the security, because they never think twice about it, and some like the corporate ladder. I’ve met such people. But it’s not for me. As a highly type A individual who thrives on merit, autonomy, and increasingly complex and challenging tasks all while having the freedom to live my life, it’s just not for me. It makes me sick to my stomach that I have to ask permission to be sick, visit family during the holidays, take a “breather” day. What kind of life is that?

  2. Interesting read. But what is the security on working online? I mean yes bloggers blog and sell things but its not easy with all the competetion. So how long can it go on. We have to be constantly in touch with whats going on, have to be on the top.

    It is hard work no doubt … however, it has its perks. It is the way to go.

    For someone who is not onlnie yet, it might be a bit confusing.

  3. David, this is a great post.

    What I love about self employment as a money coach and business strategy consultant is that my work is not static. I can decide to blog, write an article, create a membership site, look at money issues from neural patterns in the brain or look at it from the perspective of emotional drama.

    No one out there is telling me this is what a money coach looks like and this is what you are supposed to to to help people resolve their money issues.

    Understand that I am coming from the perspective of being a lawyer. I was a lawyer for 20 years. I owned my own law firm for 14 years. However, in that profession, there were a lot of dos and don'ts.

    So I love my life now. I love the intellectual freedom that I have and guess what? It is very effective for my clients. They are seeing results and I feel very fulfilled.

    Thanks for writing about this timely issue.

  4. All I can do is agree lol, nothing really more to add to it man. It is TOTALLY a mindset thing, You're also right about life changing but the paychecks staying the same lol…I loved that one.

  5. I agree. Your article is similar to an article I wrote awhile back about freedom , what is freedom? Most Americans and Canadians will take pride for living in a “free” country, I question the “freedom” and wonder what is freedom? Hey I just paid off a 30,000 dollar student loan and own my own piece of land purchased without a loan. Most people leave school in debt borrow money for a car, house etc and are in debt until they reach retirement, and then they say they own their house. Well I say big deal they reach 65 whats the point in owning at last that late in life. I say enjoy life when you are strong and youthful while it lasts. Thanks again for being in there.

  6. David, I like your post. I think I can see where your wife is coming from. Most people have the same mindset that she does about security and walking the path that the crowd does. It is a proven way to be like the masses.

    What you have and what all other successful online marketers have is a proven system. Both are proven, both are influenced by change. I think it is just a mindset. I don’t think our kind would be happy with a 9-5 job, and I don’t think the 9-5 people could handle the stress of learning a new skill to do what we do as bloggers and online marketers.

    Both are needed I think. Of course I am bias, and I like online marketing better. I just don’t think some people are cut out for it and they are the one’s that don’t think it would work. We who do it, we know!

  7. Hi David

    One thing that might be of interest to you, is that barely 100 years ago, almost everyone had their own business. Most families were involved in creating their own incomes in one field or another. This sham of “security” is a relatively recent phenomenon, but it’s certainly been adopted by “the masses”. How we love to be “victims”, rather than to take the lead. A sad state of affairs to be sure.


  8. Great Post David. The day that I decided to go on my own was the day that I read Kiyosaki’s Rich Dad Poor Dad. Slaving 9-5 really ain’t the way to live a life. Yes you might be stable now but what you build and work for in the next 50 years ain’t yours. Your family eventually do not gain anything from it cos you have been building someone’s else asset and not yours.

    So just like you, I believe in creating my own wealth and assets. And when the day I’m not around anymore, I know that the assets I built will benefit my children, my grand children and also those assets can be turn into foundations that could benefit society.

    To great wealth and everlasting income.

  9. David,

    Thanks for the inspiring post! I spent nearly a decade being a slave to the “security” that a 9-5 job provides, but I don’t plan on ever looking back now that I have control of my own life.

    Sure, there were a lot of things I “gave up” when I left the corporate world, but I gained something much more important – my freedom.

    Thanks for sharing this insight into your business and your mindset!

  10. David,

    I currently work as a chauffeur. I get paid two days a month — not every two weeks but two days a month — and I get no holiday pay, sick pay or paid time off.

    I sustained a slight tear in my rotator cuff two months ago. As I lay there in excruciating pain, it occurred to me that were this a life altering injury, I was screwed because I had no residual income. My living is made behind the steering wheel of a lincoln town car owned by someone who could care less about his chauffeurs. Time to make some moves.

    I came across your site vis a vis the recent Yaro Starak podcast. Your site is a fantastic resource and an inspiration. I’m one of those guys who is thinking of quitting the 9-5 and going balls to the wall to make an online venture work. My fellow chauffeurs hope things will be better for them in February as January was a slow month. Screw that — hope is not a strategy. It’s time to get busy.


  11. As usual, awesome article.

    Although I’m only (almost) 17, I’m considering starting an online business at some point, perhaps as a sort of hobby through college, and then I might grow it if I want after I graduate.

    As you keep repeating, this type of business is extremely flexible.

    It’s weird, because for years now, ever since I was old enough to understand that people have jobs and such, I was always going on (in my own little cute kid type way, at the time) about how I didn’t want to work for anyone except myself when I got older.

    Looks like that might turn out to be the case. 🙂

  12. David,

    Thanks for the article. Needed a little inspiration today. I am working part time to support my own starting online business. It seems sometimes that the part time job takes all the inspiration and energy out of the rest of my life. Good points.


Leave a Reply