Self-Employed? Use These Tips to Help You Save for Retirement
Self-employment comes with a whole host of financial stress, whether you’re a business owner or a freelancer. It’s hard enough sticking to a budget when you have all those expenses to think about, let alone when your income fluctuates from month to month. Let’s not mention if you need to take a sick day! While it may be par for the course, the struggle can make it hard to keep your personal savings account looking healthy.
With the financial instability that comes hand in hand with the freedom of being your own boss, it can be difficult to think of the long-term. You may have decided to put off saving for retirement, but it could be easier than you think. By applying similar principles you probably already use in your business, along with these tips, you can start building a fund for the future.
Even though your income stream can be unsteady, it’s imperative to make a budget and stick to it. If you know what expenses you have – personal ones and business ones – you can anticipate how much you’ll have leftover each month. Then, you can set aside a few months of overhead to ensure all your expenses are covered if your cash flow takes a dip. With the overhead in place, you won’t need to tap into your savings to keep things afloat in the slow months. Plus, once you’re in the habit of setting a certain amount away each month, you can keep contributing the same amount to your retirement fund.
Check out this handy guide to help you set up your budget.
Change Your Perspective
Nagy-Bagoly Arpad/Shutterstock: Thinking differently
Thinking of your business as a paycheck is a surefire way to detriment your retirement plans. Instead, understand that your business is an asset and invest in it to build its value. It may mean you take a smaller paycheck now, but you’ll turn your business into an income source for the future.
Plan Your Exit Strategy
northallertonman/Shutterstock: Setting exit deadlines
A secondary benefit of increasing the value of your business is the ability to set a “deadline” for your retirement. Transforming your venture into a transferable asset allows you to monetize in the future, which you can start planning for today. This way, when it comes time to step back, you won’t find yourself stuck waiting for the right market.
Live Within Your Means
MD_Photography/Shutterstock: Keeping a check on your wallet
It’s tempting to pay yourself more when business is good, but it’s better to set yourself a salary and stick to it. This will free up the remainder of your profits each month which you can put back into the business and into your savings. Don’t worry – you can still give yourself a bonus from time to time!
It’s Okay to Start Small
kram-9/Shutterstock: Start small
Long-term thinking can be difficult when finances are tight, but don’t be put off. Even if you start by saving a small amount each month, it will all add up, and you’ll get used to putting money aside. Take a look at your revenue for an average month and determine a reasonable amount to put away each month. Most experts suggest starting at $50, but it can be more or less. When you’re used to saving that amount, gradually increase it. You’ll have a healthy nest egg before you know it!
More in Financial Planning
The Best Financial Planning Tips for People With a Significant Net Worth
Some people are under the impression that financial planning is only essential for people who earn minimum wage or those with...December 17, 2021
A Few Tips Before You Get on the Entrepreneurship Bandwagon
At the age of 16,Richard Branson, the business magnate, started his entrepreneurship journey by launching the ‘Student’ magazine. The idea was...December 7, 2021
They Just Don’t Stop Showing Him the Money – Perks of Being Michael Jordan
It has been decades since Michael Jordan retired from the NBA, but his saga is not ending anytime soon! Often named...December 5, 2021
Attention, Companies! Delight The Parents In Your Workforce With These 3 Enticing Perks
Wake up, it’s 8 am already! Wake up your little one, make breakfast asap, change your bedsheets, make your child sit...December 3, 2021
How to Financially Cope with the Death of a Loved One
Losing a loved one isn’t an event a person gets over right away. The process of mourning can take months to...November 30, 2021
Justin Bieber and Crocs’ Potential Collaboration is Already Paying Off Even Before Launching
There was a time when young people won’t ever be caught wearing a pair of Crocs. Although they’re one of the...November 22, 2021
4 Budgeting Tips You Should Avoid at All Costs
Have you ever felt that your money is getting wasted? As if the more you try to save it, the more...November 16, 2021
Meet The 79-Year-Old Widower Who Just Bought His Dream Home Online – Here’s How He Did It
For many people on the brink of retirement, 2020 was supposed to be an easy year. The year of transition, followed...October 18, 2021
Making these Five Small Adjustments Would Prevent Your Business from Losing Money
Just like time and effort, money is a finite and valuable resource when it comes to business. Thus, entrepreneurs are always...October 15, 2021