Last Updated on May 20, 2021 by MoneyVisual
While the previous year hasn’t been the finest in that financial sense, more people have lost their permanent employment, and more have turned to self-employment.
In a way, this situation has inspired many people to start their own businesses and make sure they have some form of financial stability, while others have started monetizing their skills and education in the form of project-based work.
Either way, you can qualify as a self-employed individual, and in such circumstances, money management represents a crucial skill for success in the long term. To simplify this arduous journey, here are a few tried and tested bits of personal finance and money-management advice you can use in your everyday life and decision-making to save more and spend less.
Leverage a Smart App
Whether it’s quarantine or not, you can reduce your spending significantly if you rely on smart apps that help keep track of your expenses and habits. An app on your phone and your computer can give you the necessary overview of how you spend your money, and help you recognize any unnecessary spending.
Tracking your expenses with the help of apps is a great way for self-employed people to make sure they’re using their money wisely and investing in the most crucial aspects of their lives.
Prepare for Operational Expenses
The costs of becoming a freelancer are sometimes extremely low, to begin with, but not every profession is as simple as working from home and using nothing more than your computer and smartphone. Some freelancers need an office if you are expected to meet clients, so paying for a coworking space or a dedicated office space could be something to think about.
A better internet provider for a secure connection is another option, while maybe you will need to build your own website and advertise your services on different platforms – all of which requires financial investments and ongoing spending. Keep all that in mind when you set up your monthly spending plan and your budget.
Get the Right Insurance Coverage
Some self-employed people need to find optimal insurance to cover their health needs, but also for protecting your most valuable possessions such as your car, especially if you use it for work. It’s best to learn more about individual car insurance here, to make sure you find a suitable rate and the right coverage that won’t be too strenuous for your budget or your needs.
That way, you’ll find a policy that is customized to your driving needs, but that also takes into account your self-employed earning potential. In addition to car insurance, consider investing in a life insurance policy, too, for the sake of added security for later in life.
Set Aside a Fixed Salary
As a self-employed person, you might be tempted to change your monthly income every now and then, especially when new work comes in and you have a little extra available. Great entrepreneurs know that it’s better to limit yourself to a fixed income every month, simply because you will then be able to use the extra profit for later months when you have less work coming in, or you perhaps need to make some larger investments into your business.
A fixed salary also makes it easier for you to manage your taxes. It’s always advisable to get someone experienced to manage your books, such as a local accountant with the right qualifications. This will help you avoid fines and maximize your refunds and similar opportunities that are relevant in your region.
Plan for Your Retirement Today
Investing in your financial security as a self-employed person means that you also need to think about the future, when you are no longer able to work, or you’re ready to step down. If you have some experience with self-employment in your region already, you should understand your retirement fund options, and how you can secure an income in your silver years.
If not, perhaps it’s the right time to visit a local financial advisor who will present you with the best options, as well as the ones that make the most sense for your earning potential and your projected spending needs in the future. The sooner you start setting aside a designated sum of money for your retirement, the easier it will be for you to keep track of your savings and spending more accurately.
Even though self-employment seems like a dream job to many people, especially if you’ve managed to build your reputation over time and projects keep coming your way, managing your funds is essential.
What you do to save more money today and to spend on smart essentials can help secure your financial future as well as your quality of life. Consider these ideas as part of your spending strategy, and you can set the stage for future success as well as your own peace of mind.