Writing for Business Advice, Angela James, an associate director at financial advisor Contractor Wealth, outlines six practical money saving tips for self-employed workers to consider.
The number of people choosing to work for themselves is on the rise as record numbers of workers are turning their backs on traditional employment to go it alone.
There are now over 4.5m self-employed workers, and it’s not only young people who are ditching full-time employment, with many people in their 50s, 60s and even 70s setting up on their own.
However, there are hidden drawbacks to becoming your own boss as you have to manage your own finances. Here are six money saving tips to consider if you are self-employed.
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Emergency cash fund
Always try to hold an emergency fund in cash aiming for six months essential expenditure in case of hard times. No emergency pot is too small and it doesn’t matter how long it takes to build up, always strive to achieve what you can as something is better than nothing.
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Keep a close eye on expenditure
Always review your expenditure – it’s important to check all your service providers and lenders to make sure initial deals haven’t expired or that you can get a better rate or price by moving. You could pay more interest or fees than you need to if you don’t look regularly.
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Review your savings annually
Review your cash savings rates every year, banks and building societies will offer bonuses on savings accounts for a period of time only and it can be easy to miss the notification when this finishes. If you don’t review your accounts you won’t be making the returns that you could.
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Buying a house
Before moving house or buying your first house try to work out your costs and, whatever the additional expenditure is, try and put that to one side for three to six months to make sure you can comfortably afford it.
This helps for peace of mind and will also give you a savings boost that you can spend on lovely things for your new home or those unplanned pesky costs.
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Keep retirement in mind
Always have one eye on retirement. A common recommendation from the world of financial advice is that when it comes to retirement, you are going to need around two thirds of your annual income in order to be able to retire comfortably.
But how many people know this, and even if they do, are people taking it seriously and acting on it?
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Tax breaks
When it comes to tax and investing, are you using your allowances before they are lost? Tax breaks are available to encourage you to save and invest in your future. For those who would like to reduce their tax liabilities seek professional advice about how you can make the most of these.
Angela James is associate director at Contractor Wealth which specialises in providing financial and investment advice to independent professionals
For further expert money saving tips, take a look at our dos and don’ts of cash flow management
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