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5 Financial Goals for the Newly Self-Employed

You just did something that many people only dream of. You actually ditched the day job, and now you fly solo. You’re the CEO of your own company, party of one. It takes a lot of self-confidence and chutzpah to make this leap, so if you haven’t patted yourself on the back yet, you probably should.

But don’t revel too long, because hustlin’ ain’t easy.

Choosing to become self-employed, whether as a freelancer, consultant, or small-business owner, can be equal parts exhilarating and terrifying. While it comes with the freedom to take long lunches and set your own schedule, it also means leaving the nest and hunting for your own food.

So, where to start? In some ways, setting financial goals for a business will somewhat mirror how you’d set personal financial goals. In other ways, it will be vastly different. Here are a few tips to help you get a jumpstart on being not only your own CEO, but your own CFO, too.

1. Setting Realistic Expectations

Being your own boss is a lot of things—some expected and some not so much. And there are big pros and cons to being the only one responsible for yourself and your family.

Since you just made the leap to self-employment, it’s likely that you’re still in the bliss of coming and going as you please. But as reality sets in, you’ll learn that the expectations of self-employment aren’t always in line with the reality.

One way to potentially handle unexpected expenses that might crop up when becoming self-employed? Establishing a baseline, which is the minimum amount of cash you’d need to survive for a month. Considering only your essential essentials—must-pay bills, groceries, etc.—and creating a budget based on that number can help you figure out how to respond financially to leaner-work months.

Budgeting for low and slow months helps in several ways. Not only does it encourage you to live within your means, but it also might allow you to put any end-of-the-month surplus into your emergency fund (more on that later).

2. Making Friends with Uncle Sam

The mantra for self-employment is “pay yourself first.” And while that’s a poignant consideration, there’s someone else you might want to consider first, too: the government. That’s right, taxes are a thing you might have to worry about if you’re self-employed. Each self-employed situation is different—and contractor agreements differ depending on the workplace and other variables.

Once you understand the terms of your contract, it may help to meet with your accountant to make sure that you’re adequately saving for and paying taxes. Remember, when in doubt, it’s a good idea to consult a professional about tax nuances.

3. Separating Business from Life

This can be a tough one, especially when your business success can directly impact your personal financial goals. But regardless, you might find that separating your business and personal life as much as possible can help you separate the two and “shut off” work when you need to.

4. Growing an Emergency Fund

Whether your business is seasonal, your workflow is cyclical, or all your clients head to ski resorts over the holidays, there will be months when you’re closer to your baseline budget than you’d like.

This is a bit trickier when your income fluctuates throughout the year, but saving three to 12 times your monthly expenses can help you temper those less-lucrative months. It might also be smart to keep that emergency savings liquid, such that you have immediate access to your cash at any time.

Understandably, growing a financial reserve is easier said than done when you’re just starting out. But even a few dollars per week can get you rolling. Need a foolproof way to avoid the temptation to spend instead of save? You could set up an automatic deposit into a separate cash-based account, and then perhaps budget as if that money doesn’t exist.

5. Taking Care of Yourself

In addition to paying taxes by yourself, being self-employed can also mean establishing your own health insurance. If you’re not sure what you want to do, you could start by discussing your options with your spouse or other family members. (For example, can you join your spouse’s insurance plan?) You can also find more health insurance options on The Marketplace.

The Bottom Line

As you’re getting your self-employed financial house in order, you may also be considering opening a new checking and savings account.

SoFi Checking and Savings might be a smart solution for your needs. SoFi Checking and Savings is a checking and savings account that earns you interest and has no account fees (variable and subject to change).

SoFi Checking and Savings could be a great fit for your on-the-go professional life. The sign-up process is entirely online and takes as little as two minutes.

Get started with SoFi Checking and Savings.

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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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