Self-employment at the time of pandemic

3 financial tips to succeed as a self-employed during the pandemic
Story
December 10, 2020

Turn any situation into opportunity!

Do you see the glass half full or half empty?

If you see it half full, keep on reading because today is the best day to learn and grow your business.

Pandemic brought social and financial turbulence into our lives, but there are several ways to make sure you “stand tall when skyfall”.

Let me explain how:

1. Airbag. The same way as car airbags can save you from big or small crashes you should think about safety-cash-airbags to fall back in case of any emergency. This amount should be enough to cover your expenses over three to six months while you don’t have any other income. The best option is to keep your emergency savings in an easy-access account. Main advantages of this kind of accounts:

  • Can deposit in cash
  • Can earn interest (not very high, but it is better than nothing)
  • Can withdraw your savings anytime when you need them

 

2. Cover your back. As a self-employed, you don't receive any employment benefits and hence a sick pay when you cannot work. To address this you can try looking into special types of insurances. To cover short term illness you can try Accident, Sickness and Unemployment (ASU) insurance which compensates you up to 12 months in proportion to your income. But normally, all freelancers are strongly advised to opt for income protection insurance for longer periods and serious illness.

3. Life-long perspective and pension scheme. As you are planning your business budget and emergency savings you should think about your retirement. It may seem light years away, but it is worth to start thinking about it today. Bear in mind that as a self-employed you are entitled to State Pension, but it probably will be too small to support you after you retire. Nonetheless, the government is offering a so-called “tax-relief” for all basic-rate taxpayers of 25% of your contributions. This means that for every £100 you pay you will receive an extra tax top-up of £25.

Apart from State Pension, most self-employed opt for personal pension plans which allow to regularly put money into your “pension pot” by investing into a range of funds. To benefit from it you need to find a suitable provider and choose between three types: ordinary personal pensions, stakeholder pensions and self-invested personal pensions. We will talk about how to find the best provider and chose the right pension fund for you in our next blog posts.

Stay safe and keep building your financial security!

Guest blogger: Victoria Moskevych

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