Financial planning is essential to sustaining today’s economy and applies to everyone, regardless of job type. Financial planning can help ensure financial stability and security when circumstances are unstable. Self-employed and freelancers need proper financial planning as their income is uncertain.
In this highly competitive environment, it is essential to have a financial safety net for you and your family. Freelancers have no incentive to receive regular income and insurance from a company.
8 ways to create a secure financial plan for freelancers and freelancers
Planning out your finances is not easy and requires appropriate knowledge and contemplation. Here are a few definitive steps that your financial plan should encompass:
1. Budget Planning
2. Open a Business Account
It’s important to keep your personal accounts separate from your business accounts. Open another business account for your business and income. This will help you avoid unnecessary spending of your income and allow you to apply for bank loans with your business account.
Alternatively, you can open a high-interest savings account and have the flexibility to withdraw money without interest being added to your balance. Your business bank account should benefit your financial structure in several ways.
3. Create a Contingency Fund
In times of uncertainty on all fronts, an emergency fund can be the right choice. An emergency fund allows you to set aside money that you can use only in emergencies. This emergency amount can also be used to achieve long-term goals and commitments. For emergency funds, choosing liquid savings options or liquid debt mutual funds is the right choice.
4. Mutual Fund Investments
If you have limited time and knowledge, you can choose mutual funds to invest your money. Mutual funds are managed by fund managers who select the investment assets that are best for you. Applying a systematic investment plan (SIP) in mutual funds can help with irregular returns and also reduce risks.
Canara HSBC Life Insurance’s Invest 4G plan is a safe option as it offers a regular rollover option where the entire fund is placed in a liquid fund. The funds are then transferred to the equity fund gradually in equal parts over the next 12 months.
5. Plan for Retirement
Keeping this amount in retirement can be difficult. That’s why retirement planning is an important step in financial planning. You can purchase a pension plan with tax-free withdrawals and flexible benefit payments.
6. Life Insurance and Term Covers
Freelancers and self-employed people do not have the same advantage as salaried people of purchasing group insurance. Therefore, insurance planning is essential. Term life insurance is another smart investment to protect your family after you. Like Canara’s iSelect Smart360 term plan, HSBC Life Insurance offers a variety of premium payment options, spousal cover and advanced insurance options.
7. Planning On Income Insurance
Freelancers and self-employed people can use the additional income from income insurance to cover daily expenses. Building a pool of wealth can provide you with a double stream of income on a regular basis. Income planning is very beneficial as it is tax efficient and tax exempt under section 10(10D). Insurance return plans are based on predefined investments and terms, minimizing customer involvement throughout the process.
8. Create Multiple Income Streams
Diversify your revenue streams from a variety of clients so that if you lose one client, you can count on another. Expand your skills to reach more customers. In addition, long-term stability of work and income is guaranteed by concluding contracts with clients.
Finances are one aspect of life where uninformed decisions can cost you dearly. Careful financial planning is essential and you should follow all of these tips. As a freelancer, you have additional responsibilities because you don’t have an agency to fall back on. Effective financial planning can help you become a worry-free boss.
