How to Be Self Employed: 5 Financial Tips Everyone Should Know
Becoming your own boss is no longer a pipe dream. There are around 10 million self-employed workers in the U.S., with the sector expected to see a 7.9% growth rate in the coming years.
While working for yourself has its perks, making a living isn’t always so simple.
To help you out, we’ve compiled a list of financial tips to help you learn how to be self employed without emptying your pockets. Keep reading for more!
1. Learn to Budget
Being self-employed and not having a budget is like having a car without a steering wheel. Yeah, you can technically make it work, but good lord are you going to have a hard time doing so.
Compare your monthly expenses to your income, then analyze what you can cut back on. This isn’t the most fun part of being self-employed, and it may require some tough love, but it’s a surefire way to get your finances in order.
2. Look into Your Tax Situation
Everyone wants to be their own boss until it’s tax time.
Self-employment taxes work differently since you’re not taking money out of each paycheck for state and federal taxes. That means when tax day rolls around, you won’t have a sweet refund to look forward to — you’ll end up owing money.
The good news is that the IRS is willing to work with you. Reach out and ask about setting up a payment plan so you don’t have to pay a lump sum.
The better news is that you have a ton of write-offs. Anything you use for your business can help you get a discount on your taxes.
3. Accumulate Savings
Most people are only one medical bill away from financial rock bottom. Even if you’re not making a lot, it’s important to have some sort of nest egg tucked away in case of an emergency.
Make it a goal to save at least 10% of each paycheck you receive.
4. Track Your Earnings with a Paystub
Speaking of paychecks, it’s challenging to keep up with your income without standard documentation. Thankfully, you can create that record yourself without much effort.
An online paystub generator, like paystubcreator.net, can help you create a professional-looking stub in minutes. Plus, you can save your stubs to your computer or print them so you’ll have a more accurate record of your income when you’re calculating taxes.
5. Time is Money
We rarely stop to think about the ramifications of our spending. This can get dangerous, as you might expect.
To counteract this thought process and prevent overspending, start thinking about your expenses in terms of hours spent working. Focus not only on the cash you’re spending but the hours it takes to earn that money.
While that $70 item might not seem like much, consider how long it takes to earn $70. Is the item worth several hours of work?
How to Be Self Employed Without Going Broke
As you’re learning how to be self employed, make sure to keep track of your finances. Think about each expense and keep track of your spending.
While working for yourself can be tough, you can’t put a price on that sense of freedom.
To stay up to date on the latest education tips, make sure to check back with our blog!