Published: 02nd Aug 2024
By: Value Research
Being a freelancer or self-employed implies having an erratic stream of income and absence of benefits available to the salaried class. This makes it even more important for them to manage their money wisely.
We provide an easy step-by-step guide to smart financial planning for freelancers and self-employed.
This is the most critical step in your journey to financial stability. Here’s how you can create a safety net for yourself and your dependents – 1) Buy health and life insurance 2) Maintain an emergency fund equivalent to at least six months of your monthly expenses.
Though you may lack steady income, investing consistently is still possible. Here’s what to do – 1) Estimate the amount you may earn every month, 2) Calculate your monthly expenses, 3) Subtract the expenses from the income received. The amount left should be your monthly investment.
In case your income in a given month is more than expected, avoid investing the surplus in your business or in a mutual fund in one go. Rather, opt for STPs (not SIPs) to ensure higher returns and disciplined investment.
Depending on your investment time horizon (short, medium or long term), you should invest in a mutual fund.