Managing your income and expenditure as a contractor – staying in control

Many of us have a financial formula in mind that allows us to keep the lights on and the roof over our heads day-to-day.

No matter how you track your finances (e.g. using pots, spreadsheets or a notebook), understanding what’s happening with your cash is essential.

Many of us find it difficult to manage our finances when we are overwhelmed with other obligations, such as work, home commitments, and life in general.

And yet, being clear on our financial priorities is the foundation of any good financial plan.

Saving without clarity about what you’re saving for is a surefire way to veer off course, whether the goal is short or long term.

Similarly, burying our heads in the sand with our debt or ambling along with no understanding of what we owe only adds to the stress.

But it doesn’t have to be that way.

Putting yourself in the driving seat when it comes to your finances is the best way to stay in control and give your overall financial wellbeing a boost too.

Income

Start by working out all of your sources of income.

This includes income from contract work, as well as any other sources such as rental income, investments and savings.

Expenses

What are your recurring expenses? Which ones are fixed? Which ones are variable?

Once you have the numbers, you can establish where there might be an opportunity to eliminate wastage, for example through unused subscriptions, or by reducing costs by switching suppliers for energy or groceries.

Don’t forget to include funds set aside to meet your personal tax liabilities!

Debt

If you have debt, how are you planning to pay it off? How long will it take and how much will it cost based on your current plan?

Be proactive and set a realistic plan for clearing it that goes beyond just minimum payments.

Your future

How much of your income are you contributing towards future you?

This could be anything from saving for a house, changing careers to, perhaps most importantly, your pension planning.

Running a tight ship with your cash flow and knowing your numbers intimately, frees you up to reallocate cash where it’s needed most.

Stay in control

Ultimately, staying in control of your income and expenses is vital to building a comprehensive financial plan that works for you and helps you achieve your goals.

Without it, you could find yourself grasping in the dark, destabilising your financial foundations today, and potentially compromising your financial future.

About Jarvis

This article was written by the team behind Jarvis. If you’re a contractor, freelancer, or consultant, Jarvis is the pension that has been built from the ground up to provide you with the tools you need to accurately plan for your retirement.

Jarvis tells you how much to save based on the retirement you want to have, and how long your money needs to last. Plan ahead so that when the time comes, you can retire with confidence – in control of your pension and your future.

Because having a pension shouldn’t feel like guesswork. Find out more here.