How to Protect Yourself Financially When You Are Self-Employed

We live in an entrepreneurial age driven by the rise of online jobs and opportunities for building your career in the digital realm. In the 21st century, you can create an international business with the push of a button, which opens up numerous doors for long-term self-improvement, growth and success in the industry.

However, start-ups beware, it’s not as easy as it might initially seem to venture into your second year with a positive balance and a solvent revenue stream. You need to take extra care of your finances if you are to ensure long-term success. To that end, here is how you can protect yourself financially when you are self-employed and pave the road to an affluent future.

Get a decent insurance policy

Many a benefit comes with a steady job in a corporate setting, and financial stability even in times of personal crisis is usually one of them. In case you get sick, or want to take a few days off work, your income might suffer only slightly or not at all. When you are self-employed, you are left to your own devices. Being on your own in a competitive market can be a scary thing.

Obtaining your own insurance coverage should be one of your priorities. You want to avoid losing money every time you get sick, or worse, if you injure yourself, requiring long-term recovery. There are plenty of insurance policies for entrepreneurs you can choose from. They are usually set on a pre-agreed, monthly tax-free sum for a set period of time. This can be anywhere from 12 to 24 months, or longer. Obtaining this type of insurance will also go a long way in making you feel more secure and able to focus on building your brand.

Every business needs an accountant

This should go without saying, but you do need to employ an accountant. It’s the law. However, you don’t need to employ a financial advisor – but you should. Financial professionals are there to work closely with you in mapping out your path to long-term solvency, and depending on your aspirations, even long-term affluence.Your financial advisor will not only be able to review your credit score and win you the best loan deals should you decide to apply for a business loan, but they will also guide and advise you through the most important decisions in your career.

Plan for the future, the distant future

The key to success in the entrepreneurial realm and being self-employed, and any area of life, is always playing the long game. Instead of thinking about how you can benefit financially right away, focus on building up your savings in the long run. Don't forget to take an age pension income test in order to plan your future finances for when you reach your silver years.This will allow you to stay focused on the most important tasks that can secure you a bright financial future.  All the while ensuring that you have a financial pool once you reach your senior years. Remember, long-term solvency always trumps short-term monetary gain.

Diversify your income streams

The key to true financial independence in the modern world does not lie in one steady job. Rather in having two, three, or more unique revenue streams that will guide you through every adversity--this is the master plan when self-employed. You can focus on building up your main income stream, and then invest in creating ancillary revenue channels that will support, and ultimately match your primary income.This will not only help you develop a positive habit of always investing in your future and strengthening your finances to overcome every hardship, but it will also ensure you always have a leg to stand on should something happen to one of your revenue streams.

Assess your spending habits and adjust accordingly

Speaking of positive habits, no matter if you are working for someone else or if you’re an aspiring entrepreneur calling the shots, it’s imperative that you take a long, hard look at your spending routine and minimize your expenses wherever you can. And if you need another resource, a success coach is another person to consider partnering with to help you create your master plan so you won't feel so alone going at it by yourself. This means leading an overall healthy lifestyle devoid of any extraneous spending, and of course, sticking to the aforementioned steps in order to propel your business towards financial success.

When you take on the entrepreneurial world, there is no one to look after you, no one to else to call the shots. So in order to thrive as an entrepreneur, you need to build a concrete, long-term financial plan that will ensure you not only reach your second year with a positive bank account, but that you ensure long-term affluence as well.