Extramile Finance

One of the most common complaints about mainstream personal finance advice is that most budgeting spreadsheets, saving programs, and financial products are made for people who have a steady salary from a job.

In 2022, there will be more than five million self-employed freelancers in the UK. This raises the question: how do you handle your money when you are your boss? Here are some tips for managing your money:

Tips To Manage Your Money

1. Separate Your Personal and Business Finances

To do this, you have to keep your other financial dealings separate in your mind and body. When you accept a job offer or negotiate your pay at a salary review, you decide how much money you will get for your work.

But if you work as a freelancer, you may have to set or talk about rates all the time. Because of this difference, it’s essential to be in the right frame of mind. Because of this, there is a more vital link between your time and your money.

It is much easier to start thinking of every moment of your time in terms of how much it could be worth in money. Because of this, it may be hard to take time off, and if your rates are questioned or even turned down, it could hurt your sense of self-worth.

This could lower your rates or work for less than your time is worth. If you can set up a clear line between your work life and your personal life by knowing how much your time is worth to your company and making sure that your time away from the office is not negotiable, it will be much easier to ask for time off and get paid for it.

You should probably open a separate bank account as soon as possible for the money related to your business. In that account, your bills can be paid in and out. Doing this is probably something that will help you.

2. Start Saving For Taxes

If you work, you don’t have to worry about taxes. Because it is taken away before you even get to see it, you won’t miss it, and you won’t be able to spend it.

If you’re self-employed, it’s up to you to pay your own taxes, and you need to have the money in your bank account before you can give it to HMRC.

The best thing to do in this situation is to move your tax money into a separate account as soon as possible. This account can be a pot or space with a challenger bank or a simple savings account that is used every day.

3. Decide When to Hire an Accountant

Make sure you keep very detailed records of the money that comes into and goes out of your business and that you do your self-assessments on time. If you are just starting out and know your way around numbers pretty well, you probably don’t need an accountant.

But you should make sure you keep up with your self-evaluations. Suppose things start to get a little more complicated, like if you want to start trading as a limited company or if you have more than one source of income.

Getting an accountant is a good idea if things get more complicated.

4. Plan Your Spending With a Variable Income

Regarding budgeting, the hardest thing about being a freelancer is that you never know when an invoice will be paid. Also, will a contract be renewed, or what is around the next corner? This is the most challenging part.

You have a few different choices for how to handle this situation. Start with a simple budget. For example, you could pay your utility bills every three months instead of every month. You can save money to pay your car insurance and council tax in advance and use your credit cards as little as possible.

Once your business is more established, start taking out a certain amount of money every month from the account your business uses to pay its main bills. Be patient with yourself because it might take you a while to get to the point where you can finish this task successfully.

How To Recover Financially After Unemployment?

If you just lost your job and want to start a career as a freelancer, you still need money to pay for day-to-day expenses. There are a few options to help you cover the expenses. One way to get money is by taking out a loan from a direct lender.

The most popular type of loan is the 12-month loans for the unemployed by direct lenders. These loans could help you feel less stressed about money right away and help you get started as a freelancer. Because it’s an unsecured personal loan that doesn’t require collateral, it lets people who don’t own any property or have steady income get cash.

The application process is simple and straightforward. Many service providers will approve your loan the same day you apply and deposit the money into your bank account immediately.

Many private money lenders in the UK offer repayment plans that can be changed to fit your current financial situation. This means you can make monthly payments easier on your budget until your freelancing business starts making money.

You need to decide which option suits you best and choose the one that makes the most sense to you.

Conclusion

If you suddenly lose your job, you have to plan well to get your finances back in order and stay out of debt while you do it. Understanding the financial burden that comes with unemployment can help guide your decisions.

It shows you how to use the resources you still have in the best way possible. You should first make a list of all the money and other valuables you still have. This will give you a general idea of how much money you have available for paying bills and buying groceries.

Setting up and sticking to a strict budget can also be very helpful. This will not only help you figure out which expenses are more important than others, but it will also show you where you may be wasting money.

If you still can’t pay your bills after doing these things, you might want to get a part-time job or sell some of the things you own. You might be able to get by with these temporary solutions until you find a full-time job again.