The concept of ‘self-care’ involves taking time out of your day to do things to promote good mental health and reduce stress (lounging on the sofa counts!).
Working for yourself, while having clear advantages, also has some downsides, including a lack of holiday pay, entitlement to sick pay or access to a workplace pension scheme. Looking after your finances is one of the best ways to take care of yourself, self-employed or not.
There are a number of things you can do to protect yourself from financial blows, including:
Paying into a personal pension
With well over four million people in the UK now registered as self-employed, figures vary but the general consensus is that the majority of self-employed people don’t have a pension and with the best will in the world, even with the full State Pension, most people are likely to need additional savings in order to live comfortably in retirement.
Protect your income
Taking out an 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.
Take advantage of tax relief
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): office costs, travel expenses, costs of your business premises, stock or raw materials purchased to sell on, advertising or marketing.
Remember to keep accounts!
It can sometimes be more challenging 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.
Ask the experts
We’re here to help you take care of your finances, whatever your employment status.