This is a collaborative post.
The benefits of working as a freelancer, including relative freedom to work how you want and the ability to control all of your own earnings, come with their own drawbacks. Many of the institutions designed to help people manage their financial futures are built primarily around employees. For that reason, you need to consider your own provisions and make sure you’re putting some legwork in.
Start building your retirement now
Employees get their retirement automatically contributed to by their employer. Aside from a pension, many will put towards additional retirement funds to make sure they’re able to live the kind of lifestyle they want when they’re older. However, aside from a state pension, there isn’t much in the way of contribution help for freelancers. As such, it’s important to find retirement funds and use pension calculators like that shown at Aviva to figure out how much you stand to get in retirement and how much you might want to put together.
Protecting your income
As a freelancer, you are entirely in charge of what happens to your own income. If your work stops coming in, you’re not going to have an employer to cover you while work picks back up. As such, you need to consider methods of income protection. An emergency fund is often recommended, but saving up enough to cover 3 months’ worth of pay cheques can be challenging, to say the least.
Income protection insurance from firms like Lifesearch might be another ongoing cost to worry about, but it can ensure that you’re not left without any money should you stop earning for any reason.
Getting your foot on the ladder
For most people, the prospect of owning a home is something that they want to do at some point. It’s another step towards financial security worth taking, but it can be notoriously tough for freelancers. Institutions like banks are rigid in their standards and still, above all else, look at employment as a sign of stability, even though plenty of people work as subcontractors or freelancers in just as stable a career.
Advisors like CIS Mortgage have arisen to fill the gaps, allowing those outside of traditional employment relationships to find the loans they need to buy their own home. Make sure you find the right partners before you begin your search for a mortgage.
Work with an accountant
If you’re starting to earn more money, you’re likely to pay more tax. However, the more tax you pay, the greater the chance that you’re paying more than you rightfully should. Consider working with a freelance accountant through sites like Upwork to make sure that you’re being more strategic in filing your taxes, and keeping a hold on money that you shouldn’t be paying in the first place.
There’s nothing to stop you from having a positive financial future as a freelancer. You just need to put a little more work in than most people to ensure that you’re providing for yourself, not just now but in the years to come.