Self-employed, freelancers and contractors
Be stern with your terms
It’s tough enough to deal with a sporadic salary without having to wait for late payments too. If you work through a recruitment agency, the payment terms will most likely be agreed (and signed) up front, and adhered to. But if you work directly for a client, it might be tempting to keep things less formal. Bad idea!
According to >research from invoice software company Xero, about 60% of invoices are paid late. So make sure you draft some strict payment terms up front (for info, the same Xero research says that 70-80% of companies now demand payment within a fortnight) and ask your client to sign them before you start. Some freelancers ask for a lump sum up-front, especially with new clients. It may seem over-cautious, but most clients will understand.
Do some fortune telling
Now, you know as well as anyone that the future’s unpredictable. Markets change, budgets shift – it all has an impact on the self-employed. But if you do the kind of work that’s usually booked in advance, try to map out the year ahead – so you can see the bigger picture and make a plan.
If you’re confident using spreadsheets, that’s a pretty good format (freelance software company FreeAgent has a free cash flow forecast template if you’d like one). But if using Excel fills you with dread, there are really useful apps you can use. We like the comfortably-named ‘Cushion’ app, which lets you plan out your year and calculate your current, predicted income average for each month.
Put the pounds in different pots
You might think only wealthy folk have a need for multiple bank accounts, but even if you’re managing a modest income it’s something to think about. As a freelancer, having different accounts for different types of money could help you keep everything neatly in order. Think about setting up multiple accounts - a business account for all your work-related income and outgoings, one for tax (so you can be ready for that annual tax bill), one for savings and one for your everyday personal spending.
If you use the B current and savings accounts, you’ll already have two of those accounts in one place, and you could set up and label separate Saving Pots for the others.
Zero hours contractors
Work out your essential earning
While it’s a flexible solution for some people, for others zero-hour contracting is an unpredictable way to work and live. For one, people who have a regular, steady income can take that amount as a starting point to work out how much they’ll have leftover in a month. But if you work on a zero-hours contract basis, you have to calculate the amount you’ll need to pay your bills and personal expenses first. Only then can you figure out how many hours you’ll need to work to cover your costs.
Even if your circumstances change, it’s always good to know what your basic cost of living really is, so you have a benchmark to measure other costs – like holidays, for example – against.
Be ready for rainy days
We know it’s easier said than done, but if you have a stint of good shifts, avoid the temptation for a spree and save as much as you can. That short-term spending buzz is nothing compared to how good it feels to have a safety net in the bank. The ideal comfort-zone might be to have enough saved to cover three months’ worth of your basic bills. The B app’s Saving Pots feature is a handy tool for this too, because you can move money around as you please.
If you do want to cut back in order to save, follow the tips at the Money Saving Expert site . Their clear, up-to-date advice can help you find the best deals on loads of different purchases.
How B could help
The B app is designed to give you better control of your finances, with features like tagging, budgeting and projections to show you where you stand at any point in the week, month or year. If you’re not using these features yet, see how the B app could help you balance out your balance.
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