How To Become Financially Independent If You're Self Employed

Self employment has many benefits

Self employment has many benefits. You can be your own boss, set your own schedule and earn as much money as you are willing to put in the work for. However, there are some downsides that come along with being self employed. For starters, self-employment income is taxed much more aggressively than income generated from employment.

There are also other expenses involved with being your own boss such as business expenses, health insurance, unexpected fees, etc. All of these extra expenses really add up and make achieving financial independence difficult when you're self employed.

Fortunately, you can use all of the benefits of being self employed to your advantage. The following tips are essential if you wish to become financially independent:

1. Set up a large contingency fund. Self employment income is often sporadic. You need a large contingency fund that equals at least six months worth of self-employment income. Be sure to keep the money in easily accessible accounts.

2. Establish a business contingency fund equaling 6 months worth of business expenses. You need to protect your business. If you cannot work or if you lose a lucrative account, you need some money to ensure that your business will bounce back and recover.

3. Secure excellent health coverage. One of the benefits of being an employee is low-cost health insurance. It may be tempting to forgo this costly expense when you're self employed, but a minor surgery could destroy your hopes of becoming financially independent.

4. Purchase disability insurance. If you get sick, you cannot fill out a slip and continue receiving your paycheck. If you can't work, you will not get paid. To offset this reality, purchase insurance that will pay you when you cannot work.

5. Diversify. Never rely on one source of income. Create multiple streams of income to increase security. If one stream of income dries up, you will be able to adapt quickly by concentrating on your other business ventures.

6. Create passive streams of income. Passive income includes all income that you do not have to actively secure. Passive forms of income include money earned from websites, royalties, profit-sharing plans, interest earned, etc.

7. Save. People who are self employed need to save more aggressively than those that work for the man because they do not receive any benefits. Self employed individuals are responsible for 100 percent of their retirement savings, and they need to save aggressively if they want to be able to afford to retire.

Self employment is really a blessing, but planning is needed in order to achieve financial freedom. Most self-employed individuals earn more working on their own than they would working for someone else. Put the extra money you earn to work for you. Instead of enjoying temporary indulgences, use your money to establish a secure financial future for you and your family.

by: Dan Cavalli

POST COMMENT

How To Easily Master Beginner Keyboard Lessons Are Self Cleaning Litter Boxes True Self Cleaners? The essential keys to self improvement and motivation Essential Golf Training Aids That You Can Use For Improvement Of Your Technique. Canon 1d Mark 3 - Find Out If This Particular Grade Of Dslr Is Actually Good For Yourself Interested in Playing the Violin – Learn How To Play The Violin For Beginners Protect yourself with Personal Alarms On A Budget? Take Into Account Discounted Vinyl Flooring For Your Do It Yourself Job Camping Hiking and Backpacking Must Have Essentials How To Stop Yourself From Ejaculating Quickly - 2 Sizzling Shortcuts To Extraordinary Stamina! Set Yourself Free From Worrying Can I Represent Myself In a Separation or Divorce? How to Represent Yourself in a Divorce in Ontario! The 'heart Attack' Tool For Self Defense