A large number of the total population in the country is self reliant and self-employed. Though, they are the master of their work lives, they have to suffer the same financial dilemmas as those working in small, middle, and larger-sized corporations. Self-employed individuals do not have all cash going straight into their savings account; they too need to pay out huge sums of money in monthly living expenses, office expenses, income tax, insurances and everything else as others do. They too face Credit card debt relief issues, among others, in their day-to-day business.
1. Jot down Your Expenses and Classify Them
To begin with, you being the self-reliant person should first jot down all the expenses on a sheet of paper. Make sure you classify the expenses under professional and private heads. Take account of each and every expense that you incur frequently. Do not ignore expenses counting them as variable ones. Be honest and jot down everything thing you pay for. Now classify these expenses into needs, wants and luxuries so you have a better idea of where you can save. Also, if you are having debt issues you could get debt relief advice from Consolidated Credit
2. Create a Budget
Now that you are familiar with your expenses, you can prepare a budget very easily. Calculate your consolidated income and first list out the necessary items you need to pay for. Then look on to other items that you think are wants and cut down on them. Now you can clearly see the list of items that scooped a huge chunk of your income every month. Do the same with luxury items that you can avoid completely.
3. Prepare for Paying Taxes
Self-employed people should calculate their tax payments earlier than others. You will have to repeat the same procedure every quarter and add to you savings accordingly. You should know the exact amount payable to the tax authorities since being late can cost you even more in fees and penalties. To avoid this situation increase the amount of savings up to 40% each month.
4. Allocate Your Income
It is very important that you allocate your income into three different areas. Self-employed people do not hit a jackpot every month. Sometimes there are great failures too. The best way is to allocate a part of your income into three main areas: retirement plan, tax and emergency savings.
5. Keep Your Financial Goals Clear
Keep your financial goals clear for the future. This means that you should be able to classify what your business activities will be in the short term as well as in the long term. Also, if you plan to expand your business, do include it in your budget as it will cost you a large sum of money.
6. Save Money in an Overhead Account
When you make a lot of money, save profits in an overhead account to spend during rainy days. This would serve as your nest egg, which you can later use to draw salary and pay tax.
7. Earn Money on Your Savings for Tax Payments
It is better to keep your money for tax payments in an interest paying account. You can also invest money in short term CDs. You can purchase a three month term using that money, and withdraw the money after maturity date.
8. Increase Your Income Sources
If you have ample time left after work hours and you are eager to spend your money in developing another business, go for it now. Increasing your sources of income will cost you initially, but will yield you great sums of money in the future.
9. Do Not Over Spend
Overspending will damage your financial strength badly. However, if you have a substantial amount of saving, you can purchase some luxury items at alternate months. But when your business faces a loss, you must be able to compensate it as well for some months.
10. Look Out for Investment Modes
Currency and gold are considered the most solid forms of investment. Invest in currencies that have remained stable in the last decade. Although the profitability of gold cannot be predicted before time, it does not fluctuate very easily so you can rely upon it as well. Look out for Credit card debt relief if you have outstanding debts to pay for.
Also, if you are having debt issues you could get debt relief advice from Consolidated Credit
By: Eva k