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A Checklist for the Self-Employed

We like to think that financial planning is important to everyone in Perth, and that includes the self-employed. We know that many self-employed people tend to neglect financial planning services because they are always busy and don’t have the time. We visited the ASIC website called MoneySmart and found some information that can be helpful to the self-employed.

This information is general and is not a substitute for individual advice, but we thought it might be helpful for the self-employed to see what ASIC has to say about self-employed people and money.

Financial Planning For The Self-employed

Managing Cash Flow

Those who are self-employed tend to make a good living and earn a strong income. However, that income doesn’t always come in on a regular basis. For some, it can be months between pay periods. ASIC stresses that it is important for the self-employed to manage their cash flow properly to ensure that they have income during long gaps between “paydays.”*

Pay Yourself a Wage

ASIC recommends maintaining a high yield savings account and putting all profit into it. Then, they recommend paying yourself a wage while leaving the rest of the money in savings. They also recommend separate bank accounts for personal spending and business spending. They also recommend that you plan ahead for holidays and make sure you have money saved to fund them.*

Save Money for Taxes

Those who don’t save for taxes often find themselves owing a lot of money to the ATO at the end of the year. ASIC recommends making this a high priority.*

Retirement Planning

According to ASIC, as many as 25% of self-employed Australians don’t have any superannuation funds. They recommend building your own super.*

Income Protection

ASIC also recommends that the self-employed carry income protection insurance to ensure that they are protected in the case of being unable to work.*

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*ASIC, MoneySmart. “Self employed people.”