Effective Ways to Manage Your Finances When You’re Self-Employed
Would you rather be bounded by time or have your own schedule? Want to be stuck in traffic or stay at the comfort of your home? A lot of people chose to work and stay at their houses at the same time.
Self-employment actually has tons of benefits: not only are you your own boss and you can do all your tasks without having to dress up, you’re also not forced to take fixed lunch breaks, or refused a day off when you really need one. But probably the biggest perk of being self-employed is not having to put up with the workplace drama.
Self-employment has been gaining traction over the past years as more and more people choose to spend time with their family while making sure they still provide for them, while others simply can’t take the hassle of going to the office every day.
In fact, there are 4.8 million British who have gone the freelancing route or launched their businesses, the Office for National Statistics said.
However, that doesn’t necessarily mean they handle their finances well. According to Investment firm Fidelity International, 62 percent of self-employed individuals do not save for a pension while 28 percent don’t save at all.
Here are ways to take care of your hard-earned money so that you have some saved for the future:
Lack of employer-provided pension funds is perhaps one of the biggest caveats of being self-employed.
When you’re employed in the corporate world, the company contributes towards a portion of your savings for retirement.
But when you choose to work as a freelancer, it is all up to you to set aside a chunk of your earnings, which, to be honest, sounds demotivating.
Just think about the perks of saving for retirement: you get a 20-percent tax relief for the amount you put into a pension fund, so basically, you’re basically getting 20 percent of your money back after retirement!
Your personal account should be different from your business account. This is so that you are able to see how well you are saving and to separate how much you’re earning from your brand. Plus, the book-keeping habit can be useful in splitting the expenses sensibly.
Saving money on a piggy bank is different than planting it to grow (or die) in the future. We’re talking about investing your hard-earned cash into something you know has a chance of growing even more in the future.
You can opt to invest in shares or stocks. This way, your moolah has the potential to double or grow even more. However, note that there’s no guarantee that your investment will pay off and the value of your dough will go up.
If you are lost at what to do, either you want to start saving or you don’t have an idea on how to start your business, it’s OK to ask for help.
It is a good idea to receive advice from finance experts so that you will learn the ins and outs and the basics of what you’re planning to do.
You can also hire an accountant to help you with your annual tax return because, in case you didn’t know, being self-employed doesn’t exempt you from paying taxes.
If you find these things confusing or if you’re really lost at this kind of things, you can seek professional help to set you on a sound financial path.
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