Skip to Content

How To Save Money If You’re Self-Employed

How To Save Money If You’re Self-Employed

Sharing is caring!

Who hasn’t dreamed of being self-employed? The list of benefits is compelling; from choosing your working hours, working in whatever clothes you want, wherever you want, to saving time commuting and so on. But becoming self-employed isn’t as easy as you might think. There are a whole array of things you may have to plan for that could set you back both financially and emotionally.

 Being in charge of your own business means all the housekeeping falls on your shoulders, including taxes.

Let’s look at how you can save money if you’re self-employed in 2021.

Create a Financial Cushion.

Expect the unexpected. You never know when an emergency could strike that will prove a drain on your financial resources. Be sure to create a reserve account where, if the unthinkable happens, you’re able to survive. Creating a reserve fund (or an emergency fund as it’s sometimes called) can help you cope with the loss of a major client or any other financial drains.

Whilst you may not be able to create this fund from the beginning, consider dedicating an amount of income each month to this fund until you’ve amassed enough to keep you going through any periods of adversity. 

Know How Much You Should Charge For Your Services.

 Freelancers often fall into the mistake of not knowing how much they are worth and consequently how much they can charge. Ensuring you charge what you’re worth ensures that you aren’t working twice as hard for half the pay.

Be sure to create self-employment proof of income for when it comes time to pay your taxes or ask for a loan or mortgage.

Create A Budget.

Planning for your expenses and savings becomes exponentially easier when you create a budget. Doing so allows you to view the bigger picture of your financial situation and analyze any weak points you may have in your business strategy. Bear in mind that you’ll have to pay self-employment tax

Audit Your Direct Debits.

Everyone’s been there; you’ve signed up for a service or trial you thought was going to be useful only to find out you never use it. Keeping up to date with every direct debit you make will ensure you’re only paying for what’s necessary and not needlessly draining your funds.

Keep Your Insurance Up to Date.

Insurance is vital for many businesses. The costs of needing it and not having it can be crippling at best and lethal for your business at worst. Be sure to not fall afoul of not having insurance when you need it most by always keeping up to date with your policy and any changes that may happen.

Don’t forget your health insurance either. 

To Sum Up

Being self-employed is an aspiration of many people. The freedom it offers is appealing to multitudes of people and as such is gaining traction in the modern world. However, working for yourself doesn’t come without its trials. Read this Guide to Managing Finances as a Freelancer here.

Be sure to follow the tips above to keep on top of your finances and avoid any mishaps that could end your dream of self-employment and send you crawling with your tail between your legs back to your office job. 

Sharing is caring!