Is your side-hustle turning into a full-time gig? It may be time for a big career move.
How can you identify the right time to make the move to self-employment? Good question!
If these are your questions, stick around because I’m going to share with you my top 5 smart financial decisions that can make every self-employed wannabe’s life a lot easier.
I know, making big life decisions is tough. There are a lot of things you have to consider, situations you have to foresee and prepare for… a whole future to plan ahead, right?
So let’s figure out a way to break it into 5 manageable smart financial decisions you have to consider first.
1. Learn how to budget on a fluctuating income
It’s no secret that side-hustling often provides a variable income each month, as opposed to a 9-5 job. When you’re thinking about striking out on your own you might have to consider a few extra expenses as well.
Tip: lists can help you identify key areas to focus on as you move forward, such as:
- What are your necessary, non-negotiable monthly expenses? (rent, utilities, groceries etc.)
- What are your non-essential monthly costs? Identity a few of these unnecessary expenses you could cut out on. See how it goes and write everything down. It if works out for you, great! If not, then try cutting out the next non-essential expense on your list. The key here is to experiment and figure out what works for you.
You might also be interested in: 6 Healthy Financial Habits That Help You Build Your Wealth
2. Decide your monthly salary and stick to it
It’s important to establish a salary and stick to it each month. Why? Since your income will be variable, it’s easy to go overboard with spending when you’ve had a great month, unless you have a set-in-stone plan.
Let’s say you’ve had a couple of great months and you’ve made some extra income. Why not put it back into your business, purchase a new equipment or sign up for a training course instead of going on a shopping spree?
One of the perks of becoming self-employed is you can choose to pay yourself once a month or once a week, however works best for you.
3. Make sure you’re prepared to pay all your taxes on time
Tax – a topic nobody wants to chat about. Well, when you’re self-employed you don’t really have the luxury of putting it off.
As a business owner, it’s best to be on top of your taxes. Make sure you know what taxes you’re expected to pay and their deadlines. Missing a deadline will definitely cost you some extra bucks. Avoid that!
Tip: Find an accountant that can help you understand which taxes you should pay once you become self-employed.
4. Don’t forget about your emergency fund!
Everyone needs an emergency fund! More so if you’re taking your side-hustle to the next level, it can be risky.
Usually, your emergency fund should account for 3 to 6 months worth of expenses. Make sure it’s easy to access at any given time.
Tip: It’s best to have two emergency funds ready for you (professional and personal) before making the big career switch.
It’s best to have two emergency funds ready for you (professional and personal) before making the big career switch.
5. Plan for your future!
Let’s talk about your future. When you’re self-employed, you no longer benefit from an employer-sponsored retirement. This means you’re on your own when it comes to your retirement plan.
Don’t let that discourage you. It just means you’re in charge of your own future and that’s never a bad thing. In order to make the best decision for you and your family’s future, make sure you’re up to date with all the available retirement options.
Since we’re talking about planning for your future, here’s another thing you should consider before becoming self-employed – your loan eligibility.
If you have plans of settling down and buying a house in the future, you’ll want to make sure your new career path allows you to access a loan in order to achieve your dreams.
Get in touch with your bank and figure out a manageable plan for your future. Make sure your career switch won’t interfere with your personal dreams. Make smart financial decisions for your future!
Is your side-hustle ready to become a full-time gig?
At Shuriken Consulting you can pick the right accountant from an entire team of experts that can assist you in sorting out your financial situation, teach you how to start your own business and show you how to successfully manage it. Contact us now!