There’s a lot to consider about your personal finances if you choose to go freelance and work from home There are lots of reasons that people decide to change up their working life, either by starting a side hustle while continuing with their principal job or by stepping off the corporate ladder and going freelance in their current profession. For some, the extra income is handy and a side hustle is framed as a monetised hobby. However, for many others, the goal of turning such a project into a principal source of income is the real dream. You become your own boss and set your own path, answering to yourself on your own schedule. No side hustle? No problem. Many more people are taking the plunge and leaving their jobs to go freelance in their current profession – be it design, accounting, writing, or any number of other industries. Either way, even if you are just supplementing your income with a side hustle, there are lots of things to consider if you choose to develop it further and work for yourself. Most pressingly, what moves do you need to keep your personal finances in top condition? Recommended A number of personal finance experts and certified financial planners gave The Independent their top tips for striking out on your own. Prepare to live off a lean budget Make sure you have money set aside in the bank as a cash cushion to live on, especially if going completely freelance, says Autumn Lax, CFP, financial planner at Drucker Wealth. “If you are thinking about leaving dependable income, we recommend at least six months worth of living expenses saved in your bank account.” Come up with a bare-bones budget in order to understand exactly what the essential expenses are that you need to run your life. “Make it lean,” says Mark Wernig, CFP and principal at Dowling & Yahnke Wealth Advisors. “Revisit all budgets and financial plans that you have in place and run them leaner than you usually do.” Certified financial planner Shannah Compton Game and host of the Millennial Money podcast says that it is important to know your “foundation number”. Most watched “This is the number that you absolutely have to pay each and every month,” she explains. “Your foundation number is made up of your fixed expenses, like your rent or mortgage, car payment, credit card minimum payment, groceries, etc. Once you know this number you have an understanding of how much you need to make to cover your monthly needs.” This is also a moment to review how much you are investing. Ms Compton Game suggests considering a pause on investments until you secure new employment in order to stay on top of your financial needs. Keep your business and personal finances separate This might seem an obvious piece of advice, but it is frequently overlooked in the rush to start a new venture. “Work out how much money you’ll need to get your business started – […]
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