How to save when you’re freelancing

An image with the date 8th March to highlight the fact it's Women's Day and the fact we've seen a big rise in female freelancing recently.


Julie Hutchison

10th March 2014 at 11:21am

Saturday was International Women’s Day, with a theme of ‘Inspiring Change.’ I’d a coffee recently with a woman who’s certainly embracing this, making the transition from employment to freelancing, after becoming a mum.

Changing your work/family balance

As a new mum, the flexibility of being a freelancer can be a solution for a different work/family balance.  And many people take this step, for all sorts of reasons. There are around 1.4 million freelancers in the UK, working in a huge variety of roles, including journalism, project management and IT.

Inspiring Change – take control of your financial future

As we chatted, I could hear the challenges involved – the seasonal highs and lows of less predictable income.  I also saw the satisfaction in having a ‘portfolio career’ – one which was made-up of a variety of roles.

There was one major difference we discussed – an employer’s pension scheme, and its absence when you’re freelancing.  It’s a big contrast to the safety net of the pension which can come with employment.

When you ‘step outside the tent’, as she described it to me, that security goes – so what are your options for saving, and how might they fit your new, more flexible, working life?  After all, your savings might need to go up, down, stop or re-start, just as your pattern of income does.

10 steps on a roadmap to support change

There’s much that women can do to stay in control of their financial future and their savings when becoming a freelancer – but where to start?  It feels like a roadmap might help:

  1. What savings do you have at the moment? You need to take stock before you can plan.~
  2. Where are your savings?  In an ISA, a pension, or somewhere else?
  3. If some of these savings go back a decade or more, have you lost track of the paperwork? You might need to do some digging to get uptodate with what’s where. Time to pick up the phone.
  4. If any of your savings are in funds which are invested in the stock market, when did you last review them? If it’s been a while since you dusted off your ISA or pension, the funds may or may not match your appetite for risk any more.  If you’re comfortable choosing your own investments, you can take action and make a change if you decide to. If you’d like more help, there’s also a selection of ready-made funds these days which help you to match your appetite for risk with a fund. Here’s a questionnaire to help you get started, when it comes to understanding how much risk you might want to take with your investments.
  5. How much do you have in cash, compared to investments?  Cash can feel comforting, but if you only focus on cash savings, inflation could be your worst enemy. If you do need to top-up your cash savings, a Cash ISA could be a tax efficient way to do this eg for your emergency cash.  Cash can feel comforting, but if you only focus on cash savings, inflation could be your worst enemy. Separately, you may well have a tax reserve account, to keep cash aside to pay a future income tax bill – this makes good sense.  It means you don’t have to dip into your personal savings to pay income tax on your self-employment income on 31st January and 31st July.
  6. If you’ve decided you want to invest, the big choice could be between an ISA and a pension.  Both are for longer term savings, but they do different jobs, so think about your goals. If you might need access to funds before the age of 55, an ISA might suit better.  But if your goal is focussed on boosting your retirement income, then a pension could be the way to go.  After all, you get the 20% tax relief top-up from the government which boosts your pension pot : for every £80 you put in, you get £20 added to it.  For many people, a bit of both can be a balanced solution, when it comes to ISAs and pensions.
  7. Did you know, most ISAs and pensions are flexible these days? You could stop, start and change your payments.  Yes, there might be minimum and maximum amounts which apply, but you can be in control of what you pay in and when.
  8. Have you got an up-to-date Will? I often find people have a Will, but it was made years ago, before children arrived. I often find people have a Will, but it was made years ago, before children arrived.  Now you’re a mum, a Will is more important.  It’s also your chance to delay the age at which your children inherit, if that’s something which is important to you.  If you don’t have a Will, children would inherit at age 18 (16 in Scotland).  In your Will, you can delay this to age 21, 25 or older.
  9. Have you appointed a Guardian for your children?  You can do this in your Will, or a side letter.  It’s a sensitive topic, and one which can take some time to reflect on and make a decision.  But that’s time well invested.
  10. What life insurance do you have in place?  If something were to happen to you, funds would be needed to help pay for childcare.

Your financial future in your hands

This roadmap could help you to get started as you adjust and review your finances as a freelancing mum.  Your financial future may well be more front of mind than before you had children, because you’ve now got some youngsters on your payroll!

Taking the bold step to become a freelancer can inspire others, as you take a more entrepreneurial approach to your working life.  If you can also take control of your financial future at the same time, it’s a recipe for greater success with both your family and work life.

The information in this blog is not financial advice. A personal pension and a Stocks and Shares ISA are investments. Their value can go up or down and may be worth less than you paid in.

Standard Life has a referral service, which can help you put a will or power of attorney in place. We’ve linked with a law firm in England and Wales, and also Scotland, to make it easier for you to take the next step. These law firms offer a fixed fee service, to give you certainty over how much it will cost. If you’d like to use this service or request an Information Pack, call us on 0845 272 8848.

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