Money is a tricky subject when you’re living the freelance life, but one that you should be well versed in for your own good. Here are my money tips for being your own boss.
Your Personal Financial Plan
This is five tips rolled into one: create a personal financial plan. Knowing where you stand, where you want to get to and how you intend to get there is really important, particularly if you’re self-employed. Whether you feel like you’re not earning enough to warrant a plan, or you feel like you’re earning too much to need a plan, you will always be better off by focusing on a goal and making sure that your finances are organised to work towards that goal.
While there are many merits to living without finance, sometimes the things that you need or want are too expensive to save up for. A car, for instance, is for many out of reach without finance. Unfortunately, many traditional lenders don’t like lending to self-employed people, because people who are self-employed don’t normally have a consistent income on a monthly basis. This is particularly true if you’ve only just started out.
However, there are a number of car finance companies that brokers like motorfinance 4U work with who are sympathetic to your cause, and will lend to you if they believe it is affordable for you.
Don’t get nervous about chasing payment. If you’ve done the work then you deserve the payment. Make sure that you have clear terms, 30 days, for instance, and chase payment when it becomes overdue. If they haven’t paid and you’ve done all the chasing possible, then consider sending a letter from your solicitor. There are firms that specialise in business debt collection that you can get it contact.
If You Get Sick
It’s important to think about what you’ll do when you’re ill. There’s the odd day here and there where you’ll be on the sofa with the cold, but longer, potentially more serious illness need proper consideration. Of course, if you were employed you’d get sick pay, but as a freelancer, you don’t get this. You can see if you’re eligible for Employment and Support Allowance, which is a maximum of £108.15 a week.
Income protection insurance can cover you if you’re unable to work due to illness or an accident, so this is something well worth looking in to.
This is money 101 for anyone, whether they’re self-employed or not. An emergency fund is particularly important for those who are self-employed, and it’s often recommended to build one up before you go freelance. It should cover your expenses for 3-6 months, and should only be used if you’re desperate.