by sonja thorsvik

Four Tips For Managing Your Personal Finances As A Self-Employed Business Owner

top view of assorted gadgets on desk


If you’re self-employed, then you know that managing your personal finances can be a bit of a challenge. Unlike traditional employees who have regular paychecks and employer-sponsored benefits, self-employed workers have to take a more proactive approach to saving and investing for their future.

But just because it may be a bit more challenging doesn’t mean it’s impossible. In fact, with a little bit of planning and discipline, you can easily get your finances on track. Here are five tips to help you get started:

Separate Your Business And Personal Expenses

One of the most important things you can do for your finances is to create a budget and stick to it- one for your business and one for your personal spending. I know, I know, but “I’m the only person in my business so my business money is just my money right?” When you’re self-employed, it’s easy to let your spending get out of control because there’s no one else controlling your spending but you. So although yes, it is your money you still need to operate the two separately. I’d highly recommend reading Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine by Mike Michalowicz for greater clarity on this. (game changer!)

It’s so important to have a budget in place. Not only will it help you keep track of your spending, but it will also help ensure that you’re not overspending on unnecessary things – like recurring app subscriptions, old domain names you purchased and never launched, or even another piece of fancy workout gear (remember – you don’t need another pair of trainers – you need a new goal). If you’re not sure where to start, there are plenty of budgeting apps and software programs that can help. Just make sure to find one that fits your needs and lifestyle.

Save For Taxes

When you are self-employed, saving for taxes can be a daunting prospect. However, with these few tips, the process does not have to be so intimidating. First, estimate your taxes for the year based on what you anticipate earning. This will allow you to set aside funds every month rather than having to come up with all of the taxes at once. Second, set aside money every month in a separate savings account dedicated solely to taxes

By systematically setting aside money every month and not tapping into that account balance unless absolutely necessary, it may be possible to have sufficient funds ready when taxes are due. Lastly, try keeping any extra payments received or large bonuses earned in the savings account designated for taxes as well; this could help reduce stress near tax season. By following these 3 simple tips, self-employed individuals can save for quarterly taxes without unnecessary worry or stress. Personally, I put the due dates on my calendar a week before so that I can pay them on time.

Related: Self-Employed People Pay The Most Taxes — How To Lower Them ASAP

Build An Emergency Fund 

Another good tip for self-employed business owners (and all humans) is to build an emergency fund. This is important because when you’re self-employed, there’s no such thing as paid sick days or vacation days. So if something comes up and you need time off, you could end up losing out on income. 

An emergency fund can help alleviate some of that financial stress by giving you a cushion of cash to fall back on when unexpected expenses pop up or you lose a client (trust me, it happens). Ideally, your emergency fund should be able to cover three to six months of living expenses. But if that’s not possible right now, just start by saving what you can until you reach your goal. One thing to note here, your weekly mani-pedi sessions and the fancy tequila are NOT part of your fixed monthly expenses ok – these are luxuries – and if you all of a sudden wind up with no paycheck for a few months, those are not your priorities – finding another way to generate income is.

Invest In Yourself 

Investing in yourself as a freelancer is a key factor in driving your success. Developing new skills, honing existing skills, and taking time to reflect on your personal and professional development will help to keep you relevant in your industry. This means that you should maintain a sharp focus when it comes to setting goals and tracking your progress. Taking the opportunity to network with other professionals could be mutually beneficial and yield new insights into best practices and industry trends. Doing things like taking online classes, reading up on news related to your field, or joining membership groups are all ways to invest in yourself as a freelancer. A small investment of time and effort today could mean major results in the future.


Conclusion: 

Managing your finances as a self-employed business owner can be challenging, but it’s not impossible. By following these tips, you can easily get your finances on track and ensure that your future is secure.

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Meet YOUR HOST

SONJA THORSVIK



I started my own entrepreneurial career in 2012 scaling up from $0 a year to over $100,000 each and every year. I firmly and wholeheartedly believe there are ways for all of us self-employed entrepreneurs to reach six-figures and beyond and I'm unapologetically here to show you how I do it so you can make your next best move. Let's go.

foUNDER of gigging for gold
i like my coffee black
@sonjathorsvik

Obsessed With Increasing Your Odds of success