Money management for self-employed women
In today’s economy, more and more people are self-employed, working on a contract basis, consulting or getting work through agencies. Careful record keeping is essential in this situation but even then it’s all too easy to be overwhelmed by paperwork and the sheer number of things you need to keep track of. This short guide will help you to stay on top of money management.
It’s hard to draw up a consistent budget when you’re earning different amounts from one month to the next. Instead of trying to manage it as you go, look back over the past three years (or as long as you’ve been doing this type of work) and work out your average income per month. Draw up a budget based on the figures that cover your vital expenses, then save what you can out of what’s left over in good months and use it to get through the leaner ones.
Tax and National Insurance
Managing tax as a self-employed person has become a bit easier since the process of claiming expenses was simplified a few years ago but it still requires quite a bit of careful work. Many self-employed people prefer to work through an umbrella company which takes care of tax and national insurance and simply pays them the rest as a traditional employer would pay a wage. Even if your earnings are below the NI threshold it can be worth making voluntary contributions to preserve your eligibility for a state pension and certain benefits.
Rent and mortgages
Good money management and protecting your credit record means that you can still be eligible for a mortgage even if you’re self-employed. If you’re told that you need a consistent employment record in order to be allowed to rent a particular home, producing your last six bank statements is usually an acceptable substitute.
If your type of workplaces you at risk of long dry spells, it’s worth setting up some kind of income protection. You can do this by purchasing income protection insurance or by joining a trade union which pledges to support members who are out of work and find themselves in difficult circumstances. Alternatively, you can put some of your earnings into a trust to draw on when needed.
Retiring on a state pension won’t leave you with much to live on so if you’re self-employed it’s worth looking at setting up a private pension at as early a stage as you can. Many pension companies offer tailored schemes for self-employed individuals that allow for the fact that your income is variable and allow some flexibility as far as payments are concerned.
Good planning in these areas will help to ensure that you’re able to meet all your important financial commitments and always have enough to live on. It will help you take control of your income so that you’re able to do the same things as traditionally employed people while continuing to do the work you love.