When you are working from home, or you have your own business, you are self employed. This means that you are completely responsible for paying your tax, for all your legal requirements, for insurance. It also means that the earnings you bring in may be the only income you have. Its crucially important that you watch your spending. Here we look at budgeting when self employed.
These ideas will work even if you have a side hustle job, or whether you are completely self employed. Usually, if you are taking on an extra job, it means you want that job to be your main source of income eventually. Therefore its equally as important to watch your budget, so you can save for the future.
Try to save. I do realise this can be easier said than done, but the self employed really need a buffer to fall back on. Depending on your job, there could be some weeks or months where you don’t get enough work. For instance, if you are a dog walker, customers may move house, or get a job where they work from home so don’t need your services any more. The pandemic has seen lots of self employed people struggle to find customers, as more people work from home and don’t need things like cleaners or decorators. If you have savings, then you can fall back on those if you really need to.
Some ways to save
Use a special savings account like Monzo, who will put your small change in a special account so you hardly notice
At the end of the day, throw any small change into a jar. Yes, this still works. Its a great way of saving for things like holidays. If you get tips in your business, put them in here too. (Remember to still declare them for tax purposes!)
Work out how much you are spending on food per week. Can you cut it down? Do you have any food waste at the end of the week? If you do – you can cut it down. Pad out bolognese and chilli with lentils rather than meat, and freeze anything you don’t use. Then you often have a freezer full of food and you will only need to buy the essentials.
What about your bills? Can you cut them down? Check out compare sites to see if your utility or insurance bills can be reduced.
Mortgages are a huge part of your monthly outgoings, but probably the most important. If you are already in a property you love, have you thought about remortgaging? Again, check online for the best rates, and make sure you calculate your payments first. This could be a big money saver, and even a way to get some equity out to start your new business.
Moving house – is your house the right size for your business AND family? Depending on your business, you may need a home office, or a large garden for children (if you are a childminder) or dogs. Once you have checked all your outgoings, see if you can afford a bigger property. If you can, then now for the fun bit! Time to start searching on Right Move for your ideal house.
Subscriptions and monthly bills. How many of these can you do without? Do you really need a work phone and a personal mobile, when all you use your personal mobile for is Facebook? What about the movie channels? Could you cancel them and save? Things like monthly subscription boxes are a luxury item – if you can afford it then great. But if you don’t have your savings buffer, then cancel anything you can until you do have it.