It is estimated that nearly half of the UK’s working population will move to self employment by 2020. Workers are fed up with lack of flexible working timings, low wage and difficulty to commute.
It’s a fact that starting and running your own business is not easy. Also there is one major pitfall here – being your own boss, your income is not secure. If you have been a wage earner for years and used to get paid every month end, this might look risky, especially if you are the only earning person in your family. You might earn thousand pounds one month but just 50 pounds next month.
So if you’re a self-employed or planning to start your own business, you need to see your money differently and learn how to survive on an irregular income.
Having an irregular income is not a bad thing. You just need to be wise in planning and for every eventuality.
Here is how you can make a budge on an irregular income-
- Make a Budget: Making a budget is the first step that you should do when you’re self-employed or don’t have regular source of income. People generally think that budget is only important when someone has regular source of income. But that’s a wrong perception. The importance of budget is even more when you have an irregular source of income or are freelancing.
A detailed spreadsheet of all your income and expenditure will give you a clear picture of your financial status. There is no use of working on your own if you don’t have any idea of what you need to earn.
Set up a budget. Note down how much you need to pay each month i.e. your target. Then make a list of all your other expenditures and it’s your secondary target. Add them all together and there’s your amount which you need to earn.
- Be Hard With Yourself: It may be tempting, if you have worked so hard and earned a lot of cash, to spend it all. But keep this thing in mind: there is no surety that next month you will earn more or nothing at all. So when you get paid, make wise use of money something like this:
- Pay your mandatory expense like rent, bills, food, etc.
- Pay other expenses related to business.
- Pay an instalment if you have any
- Embrace Yourself With Savings: After paying for all your expenses if you are left with some extra cash then put those into a saving account. This will help you when you have less assignment to do and help you handle any emergency need.
If you fail to do so then you to go for a loan. Taking a loan is not very easy though if you a bad credit score. If your credit score is good then you can get the loan easily otherwise you to take the loan from a private lender like installment loans for bad credit borrowers.
- Build Wealth for Future: Being self-employed doesn’t necessarily mean living hand-to-mouth always. Think about how you can use your hard earned in order to build wealth for future.
You can invest your money into your business to further expand it. You have option to invest in stocks and share market.
Now it’s your call how would you like to manage your money when self employed and survive on it. With the traits like good budgeting and planning you can manage your financial situation very well even though you are self employed.