Being Self-Employed - Planning for all Eventualities

Photo by Corinne Kutz on Unsplash

{This is a collaborative post}

I became self-employed back in the Spring of 2013 and in many ways, I have never looked back. It provides me with the flexibility I never had when I was traditionally employed. As a mother with a growing family, it allows me the freedom to be there when the kids need or want me, to be able to volunteer for charities and my church and to just take an afternoon off if I fancy a walk in the hills with my husband. 

There are so many advantages to being self-employed that I'd be hard-pressed to name them all, but there are also a few worries that come alongside it. Thankfully we live in a house that comes with my husband's job and this takes away some of the financial pressure that we used to face when we had a mortgage, utility bills and council tax to cover.

I've happily gone along over the last few years, enjoying our lifestyle and spending the money I earnt on family holidays, meals out and some nice treats for the kids, but the events of the last year have really made me think about how protected we are as a family for all eventualities. Of course, our faith is in Jesus as we are Christians but we're told in the bible to have faith and also to take steps forward and to do the footwork.

So, recently I've been looking at our family's finances and the plans we have in place for if the worst was to happen. The areas I have been reviewing are -

Income Protection Insurance

If I was to fall ill or get injured and we lost my self-employed income we'd certainly feel it as a family. Thankfully we'd still be able to pay our bills and eat but our lifestyle would rapidly deteriorate as the girls wouldn't be able to have their trendy trainers, our odd takeaway would be a thing of the past and our holidays would be in our own home. 

Once we move out of our current home and we either buy or rent a property again, then my becoming ill and the loss of my income would probably have a far more detrimental impact and we may find ourselves not being able to pay the bare essentials like the gas bill, or having enough to buy food. That kind of situation doesn't bear thinking about and to be honest, I don't need to as I could ensure that even if I fell ill or got badly injured we could still have a similar amount of money coming in each month if we take out income protection insurance.

Income protection insurance will usually pay out between 50% and 70% - and the cost of a policy depends on your age, job, your health and lifestyle and the percentage of income you’d like to cover.  When self-employed and taking out an income protection policy, your monthly income is based on your share of the pre-tax profits generated by your business.

When did you last check your Pension? It could be time for a Health Check

Photo by Michael Longmire on Unsplash

{This post was commissioned by Profile Pensions/ Mumsnet}

With an ever-ageing society as people live longer, it’s now quite different as a woman heading towards pensionable age. Well, I say heading towards, but I am actually quite a few years off the age to claim my state pension. As a youngster, all women could take their state retirement benefit from age 60, but now for me, as someone born in 1973, I’ll be 67 when I can take my state pension, that will be in 2040.

Will my State Pension be Enough?

If I was of the age to retire today the full level of the new state pension is £168.60 a week (£8,767.20 a year), as long as I have 35 years of NI contributions. If we assume that this raises in line with inflation, it means that when I retire this would be no-where near enough to allow me to live a comfortable lifestyle. How do you pay rent, bills, food and other living costs on around £700 a month, especially if you don’t have a council or mortgage-free house?

I input a few brief details into the Profile Pensions calculator to see how much yearly income my husband and I might need if we were to retire at age 67, whilst renting a house, and it showed that between us we’d need £24,589 per year on top of our state pension. Are our pensions operating at a level to give us that kind of yearly pay out in twenty years? I suspect not.

Which is the best choice of bank accounts?

Jars with Dollars from Shutterstock

It’s safe to say that, after the recent recession, it will take many, many years before banks are able to establish a reputation that vaguely resembles ‘consumer friendly’. The question is, how hard are they actually trying?

The economic crisis from 2007-10, which was in many ways the result of irresponsible lending from banks themselves, led to a bailout from the taxpayer which peaked at £955 billion. And with the amounts of interest being offered by most banks on current accounts and Cash ISAs in recent years having plunged towards the derisory, they certainly haven’t endeared themselves to savers since.

That said, there are some good deals out there for those who are open to change in terms of who they bank with; not only in terms of new customer rewards, but also the interest, insurance and overdraft rates they offer.