You need an emergency fund
You know that everyone should have an emergency fund.
It's particularly important as a 1099, because there will be times when you don't have any billable work lined up and therefore, don't have an income.
Most people don't expect to lose their job, but as a 1099, you should expect periods of being "unemployed."
When you get your first 1099 project, you'll be making more money, hopefully a lot more.
I recommend savings most of the additional income. Maybe 75% if you can swing it.
Keep doing that until you have one year of personal expenses saved. After you have one year of expenses saved, resume investing, taking fun vacations, or whatever it is you want to do.
Note that if your lifestyle gets more expensive, you'll need to add more funds to your emergency fund.
Then, when you are in between projects, you can draw down on that fund to maintain your lifestyle.
Once you're back in a billable gig, you can add additional funds until you hit the 1 year mark again.
There are a few benefits to doing this:
- You might be able to actually enjoy the time off from work since you planned and prepared for it
- You won't feel compelled to take a low paying or undesirable project
- You can take more risks with your 1099 business or other side projects
I'll also note that when you do draw down on your emergency funds, it will feel like you took two steps forward and one step back.
That's normal. But, be assured that this is a normal part of 1099 life. It's not really an emergency, it's just a normal business event.