Forgot password?

Quick Savings Tips For Self-Employed People

Switching from employment to self-employment is an exciting step. You can now control your work hours, who you work with and even what you earn. But self-employment also comes with more financial responsibilities, meaning you need to learn new ways of budgeting and saving.

With the right tips, making this change is simple. Keep reading to learn how to manage your money as a freelancer with ease.

1. Budget For Taxes

Rule one of budgeting for freelancers and self-employed: Always save for your taxes.

No matter what you earn, you will have to pay your taxes. Tax time can be stressful for self-employed people, but it doesn’t have to be if you continually save throughout the year.

Reserve approximately 30% of your income for taxes. You can leave this in a business bank account or savings account — as long as it is somewhere where you can’t touch it until tax time, you are good to go.

Pro Tip: Schedule a time for monitoring your finances at the end of each month. Check you have saved enough money during the month to cover the taxes from that month’s earnings. This way, if you have a shortfall, you can catch up with payments before the tax deadline.

2. Make A Small Effort Every Day

If you want to be extra prepared, dedicate around 15 minutes to your finances daily. This could be organizing receipts, filing recent invoices or simply checking whether your finances are on track.

Reviewing your finances daily is one of the best savings tips for self-employed people, as it can significantly reduce the work you must do before the tax deadline. Work smarter, not harder!

3. Create A Retirement Fund

Even if retirement seems far off, the sooner you start saving, the better. Start setting aside money every month and investigate retirement savings accounts to make your money go further.

This is an essential freelancer and small business owner saving tip, so kick-start the process ASAP.

4. Build A Business Budget

Budgets are the backbone of any business, and you should have one to inform your spending decisions as a self-employed person.

A critical mistake some freelancers make is not operating like a business. However, this can cost you in the long term. A strong budget plan for self-employment is the key to good cash management and staying on track to meet your personal financial goals.

5. Pay Yourself A Monthly Wage

There are plenty of strategies to bolster your finances. But another critical part of knowing how to save as a freelancer is paying yourself a monthly wage.

Yes, being self-employed comes with perks like being in control of your finances and not waiting for a monthly pay cheque. However, drawing money from your business account without any rhyme or reason is the best way to accidentally spend your tax money.

Though you are self-employed, you are still a business owner. So, create a payday and pay yourself a wage once a month. You will thank yourself in the future, trust us.

Budgeting For Freelancers - The Bottom Line

Whether you are new to the world of self-employment or looking to reinforce your current plan, hopefully, this blog has inspired you to strengthen your finances. Always regularly check in on your finances and ,if in doubt, work with a professional for personal advice.

More Information

Five reasons you should start saving

How Polar Credit can help with a variable income

What Are National Insurance Payments?

Check out our other great content in our Info Hub, with articles about the different types of credit products, money management tips and help with saving money!