When you’re self-employed your earnings aren’t capped, meaning you have the potential to earn a whole lot of money if things are going well. However, on the other side of the coin, there can also be a lot of uncertainty. If you work for yourself, here are some smart moves you can make to improve your financial position.
Have other streams of income
As a self employed person, fluctuations in income come with the territory. Unlike working as an employee, you’re not getting paid a set amount by a boss each week or month, you source your own jobs and what you make completely depends on the amount of business you’ve had. You could sign up to a freelancing site and take on extra work from here if you’re having a slow month. You could write a blog, and monetise it later down the line once it’s established. You could set up your own home business, or make investments. Either way, having multiple sources of potential income means that if one area is slower, you can focus in on another to ensure you’re not left short.
Make sure you have savings
Having savings in the bank is something that all of us should aim for, but it’s especially important when you’re self employed. If you do go through a slower time, you don’t end up in a disastrous situation with money. Set up a savings account, and use this to fall back on only when times are difficult with work.
Get ahead with your bills
As well as having access to cash during difficult times, being ahead with your bills can be really helpful. If you have the ability to pay some of your bills in one lump sum for the year (such as car insurance, tv licence etc) then do this rather than spreading it into monthly payments. That way, if you end up short on cash you at least don’t have to worry about falling behind with bills. A smart move would be to set up any monthly bills that you do have to come out of a separate bank account that’s just for bills. Aim to put extra money in this account to act as a buffer, ideally enough to cover three months. That way, if you’re really in a bad situation with money, you have three months to make plans or figure something out before you need to worry about arrears, debt and even losing your home.
Get health insurance
An accident or a diagnosis can be disastrous to anyone, but as a self employed person, you’re not entitled to any sick pay off an employer (since you don’t have one). Therefore, being covered for any medical bills or time off work is something to look into. If it’s an accident which wasn’t caused by you, a solicitor like Gray and White Law can help you get the money you’re entitled to. But in case a claim can’t be paid or there wasn’t any blame, having insurance means your medical bills are covered. Just be sure to read the fine print so you know exactly what you’re paying for.