How can you manage your finances as a self-employed team manager?

Being a self-employed team manager can be rewarding and challenging, but it also requires careful financial planning and management. You have to deal with irregular income, taxes, expenses, and savings, while leading your team and delivering quality work to your clients. In this article, we will share some tips and best practices on how to manage your finances as a self-employed team manager.

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1 Track your income and expenses

The first step to managing your finances is to track your income and expenses. You need to know how much money you are making and spending each month, and where it is going. You can use accounting software, spreadsheets, or apps to record and categorize your transactions. This will help you to monitor your cash flow, identify your profitable and unprofitable projects, and plan your budget accordingly.

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Kevin Morgan

Managing Director - Echo Financial Advisors LTD
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When planning your expenses be sure to look ahead for any irregular payments you may have coming up, as these often catch people out. Be realistic about your projections and ensure you do not overestimate your income, as this may lead to unexpected cash flow issues down the line. As a financial advisor I get to speak to a lot of individuals about their finances, and what I hear quite often is “I know how to budget, but I just don’t get the time”. Budgeting is the foundation of any financial plan, so taking the time to sit down and do it thoroughly is immensely important.

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2 Set aside money for taxes

As a self-employed team manager, you are responsible for paying your own taxes, such as income tax, self-employment tax, and sales tax. You should set aside a percentage of your income each month for taxes, and keep it in a separate account. You should also keep track of your tax deductions, such as business expenses, home office, and retirement contributions. You can consult a tax professional or use online tools to estimate your tax liability and plan ahead.

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Arynton Hardy, AIF®

Principal Wealth Manager at Savvy Wealth
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Start by designating a specific portion of your income each month for taxes and keep this money in a separate account, so you're not tempted to spend it. In a high interest rate environment like we are in right now, if you have extra income, you may want to think about utilizing short term cash options such as Money Market accounts or Treasuries. Utilize software to maintain records of your tax-deductible expenses, including business-related costs, home office expenses, and retirement contributions. Staying organized in this regard will not only help reduce your tax liability but also ensure that you're maximizing potential deductions.

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3 Save for emergencies and retirement

Another important aspect of managing your finances is to save for emergencies and retirement. You never know when you might face a sudden loss of income, a medical emergency, or a major repair. You should have an emergency fund that can cover at least three to six months of your living expenses. You should also save for your retirement, as you won't have access to an employer-sponsored plan. You can choose from various options, such as IRAs, SEP-IRAs, or solo 401(k)s, depending on your income and goals.

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4 Manage your debt and credit

Managing your debt and credit is also crucial for your financial health and stability. You should avoid accumulating high-interest debt, such as credit cards, personal loans, or payday loans. You should pay off your debt as soon as possible, and use a debt repayment strategy, such as the snowball or avalanche method. You should also maintain a good credit score, as it can affect your ability to get loans, mortgages, or insurance. You can improve your credit score by paying your bills on time, keeping your credit utilization low, and checking your credit report regularly.

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Kevin Morgan

Managing Director - Echo Financial Advisors LTD
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When running your own business it’s important to understand the difference between good debt and bad debt. Good debt is often used to invest in the growth of your business and can be tax deductible. Bad debt has already been highlighted above.

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5 Invest in your team and business

Finally, you should invest in your team and business, as they are your most valuable assets. You should provide your team with fair compensation, training, feedback, and recognition. You should also invest in your own professional development, such as learning new skills, attending courses, or joining networks. You should also invest in your business, such as upgrading your equipment, software, or marketing. These investments will help you to increase your productivity, quality, and reputation, and attract more clients and revenue.

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Kevin Morgan

Managing Director - Echo Financial Advisors LTD
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The most important part of any team without exception is the selection process. This is often an overlooked aspect of building the foundation of your enterprise. Your future success could depend on the selections you make when hiring your team. Take your time, do NOT rush this process. Finding the right team members really can be the make or break of your business.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Kevin Morgan

Managing Director - Echo Financial Advisors LTD
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I’m not sure if this has been emphasised, but before starting any business venture, you must first understand yourself and the reasons and motivations behind your decision to start off on your own. Starting out on your own is not easy, and takes an incredible amount of hard work, both mentally and emotionally. You need to know your why, and that why needs to be strong enough to keep you going through the inevitable difficult times ahead.

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How can you manage your finances as a self-employed team manager?

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2

3

4

5

6

1 Track your income and expenses

2 Set aside money for taxes

3 Save for emergencies and retirement

4 Manage your debt and credit

5 Invest in your team and business

6 Here’s what else to consider

Team Management

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How can you manage your finances as a self-employed team manager?

1

2

3

4

5

6

1 Track your income and expenses

2 Set aside money for taxes

3 Save for emergencies and retirement

4 Manage your debt and credit

5 Invest in your team and business

6 Here’s what else to consider

Team Management

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