Self-employment, for some, entails the end of the 9-5 routine, enabling people to work as and when they would like to, managing both themselves and their workloads. However, self-employment is also the route to many other problems such as organizing your time and finding stable work.
This article will look at the potential problems of self-employment and possible solutions you can take to solve these.
Being prepared for every eventuality is especially important when you are managing your own workload and are responsible for your business’s success. Although many self-employed individuals will not face problems of this nature from clients, if you are providing work or advice for clients, including handling data, you should take out insurance to protect yourself against any claims against you. For instance, if you make a professional mistake in your work and your client sues you. Professional indemnity cover, like that provided by Hiscox, will insure you in the event of business emergencies such as these and provide you with expert knowledge and flexible policies to help you manage the potential risks of being self-employed.
Without a monthly or fortnightly paycheck going straight into your bank account, it can be hard to manage money, especially if you are being paid inconsistently or in batches. Having poor money management could lead to an inability to take out a mortgage, or even to pay necessary monthly bills such as water rates.
You should lessen the impact of your irregular income by creating a budget and a spreadsheet to help you manage this. Another method to help you manage money is to keep a separate bank account for your savings and personal spending money, meaning that you can both save and view the amount of money that you can spend quickly and easily.
Saving for a pension
Saving for a pension can easily be forgotten during months of unstable income and different workloads. Unlike the employed, who are enrolled in an automatic pension scheme after their probation period, self-employed people must actively save towards their retirement. Additionally, if you are self-employed, you do not have the additional encouragement of employers contributing to your savings.
The best way to overcome this is to pay regularly into your pension fund and realize the benefits of doing so: for example, you will get tax relief on your contributions.
Other problems that you may face include:
Unstable Income: If your income is not stable enough to pay rent and bills effectively, the best way to solve this is through opening a savings account and putting money into this when you can and when you get paid, rather than at the end of the month.
Differing workloads: The best way to solve the problem of clustered workloads is by pre-planning. By understanding when you will get the most work, you will be able to plan effectively to spread out the impact of your workload and ensure that you can do as much work as possible.