Self-Employed and Saving Money

Tax time is always a funny part of the year for the self-employed, well, at least I find it to be. All of a sudden, you are confronted with the ebb and flow of your money, there in black and white. Your outgoings stack up, your income wavers and you start to doubt that you will ever make a crust, let alone save any money. Here’s how to start saving while working for no man but yourself.

Cash In Reserve

I get paid in cash. It was hard enough proving to the real estate agent I actually have a job, as my only proof was a ledger book and a series of dodgy looking tour dates. With no benefits, no sick leave or rostered days off, having cash in reserve is crucial. It seems so easy to spend when it’s just lying in your wallet, but keeping some of it aside for the rainy day emergency is crucial for long-term stability. If you don’t, you could end up losing big amounts of money if something goes awry.

Budget

Okay, they’re important for everyone. But when the buck begins and ends with you, in terms of your entire business as well as your personal life, you need to have a sincerely good grasp of your figures. On top of keeping financially stable, you need to be aware when you’ve hit the profit margin for the week or month. Factor in savings for the budget, and work towards incrementally increasing how much money you can put away each month.

Tracking Income

Having a budget can be pretty tricky when you don’t have a regular source of income however. Keeping track of your income- the fluctuations especially- will help you get a holistic view of your finances. You need to be able to survive the troughs between well-paying jobs. On top of that, you need a good account of what you’ve been earning for tax time.

Tracking Assets

You need to know the whole ballgame when it comes to your finances. Of course, everyone should. But if you lose sight of the whole picture, your career as well as your personal financial security can be jeopardised. Know the ins and outs of your assets, including how much money you have funneled back into your business.

Work In Percentages

As you’re unlikely to have a stable figure, working from rough percentages can be a helpful way to approach your finances. Aim for 5% savings from every bit of income, irregardless of how much it is. Have the discipline to make up the extra, should you come short one week or month. If you use your credit card to tide you over, make sure you then repay that when you get a larger source of income. You’ll have no superannuation from an employer, so voluntary contributions are crucial. Saving money while self-employed can be tricky, but with discipline and thorough records, it’s by no means impossible

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