Why Life as a Freelancer Needs Additional Financial Vigilance
Working for yourself presents a set of financial challenges that are quite different from those of an employee.
When you’re generating your own income, getting the best from the money you earn and planning for the future aren’t always straightforward. For these reasons, you’ll need to be more proactive when it comes to managing and planning your finances.
Knowing Where to Start
Experts often recommend having a financial cushion of anything from three to six months of living expenses to cover situations like delayed payments, illness or a lack of demand. This might include saving a certain percentage of your profits on a regular basis. Speaking to an accountant will help with your business financial decisions as well as take care of tax and compliance.
On top of the complexities of running your own business, you need to be thinking about your pension plan. By law, employers must pay into a managed pension scheme for their employees. But when you’re self-employed, there’s nobody to set up a pension scheme for you, there’s nobody contributing into it for you, and your income may not be regular enough to make monthly payments. The Money Advice Service provides an informative starting point for freelancers looking for pensions and recommends consulting a regulated independent financial adviser before making a decision.
The benefits of taking independent financial advice, whether it’s for ongoing or longer term financial planning, is that an independent financial adviser (or IFA) can recommend savings products from the whole of the market rather than products limited to those offered by high street banks or building societies. Using a regulated IFA protects you in the event that the product turns out to be unsuitable for you, or if the provider goes under.
Supported by specially designed software for financial advisers such as that from intelliflo.com/financial-adviser-software, IFAs can tailor a plan with your specific needs in mind.
A face-to-face consultation is the best way to explore your financial needs and is good for any freelancer due to their complex financial position. Today’s financial advisers are equipped with the latest technology to provide everything from automated robo-advice to a sophisticated platform from which you and your adviser can analyse your individual financial situation and take the right decisions.