You may have heard of the concept of ‘self-care’ – taking time out of your day to do things that reduce stress and promote good mental health.
If you’re self employed, though, taking time out of your hectic schedule and looking after your finances is probably one of the best ways to take care of yourself. Working for yourself, while having clear advantages, also has some downsides – notably a lack of entitlement to sick pay, holiday pay, or access to a workplace pension scheme.
There are some things you can do to mitigate these disadvantages and protect yourself from financial blows, including:
Over five million Brits are now registered as self employed, yet under a quarter (24%) of them are actively saving into a pension. With the full state pension currently just £175.20 per week, or a little over £9,100 a year, self-employed people are likely to need additional savings to live comfortably in retirement. While things may be tight because of the coronavirus pandemic, believe us – you’ll thank yourself later for making those all-important contributions.
By which we don’t just mean put it in the bank. Taking out a specialist self-employed income protection policy could act as a financial safety net if you were too sick to work or had to take time off due to an injury.
These policies are designed to pay out a monthly income, on a short or long-term basis, to cover expenses such as your rent or mortgage, bills, and other living costs if you are unable to work.
If you’re self employed, you can deduct some of the costs of running your business from your taxable profits, reducing the overall amount of tax you pay. These are called ‘allowable expenses’, and include (but aren’t limited to):
It can be a little trickier to get a mortgage if you’re self employed but keeping impeccable accounts will certainly help. Lenders will want to see two to three years’ accounts signed off by an accountant, so keep this in mind if you’re looking to buy.
If you’d like help with taking care of your finances as a self employed worker, then we’re here to help. We can help you sort an income protection policy, find a suitable mortgage deal, and advise on personal pensions.
Note: The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested. Your home may be repossessed if you do not keep up repayments on your mortgage.