Today I wanted to talk about an aspect of freelance life I’m trying to be much more savvy
A Little about Multiply
Multiply is a new finance app specifically aimed at self-employed folk (or full-time workers thinking of making the leap) like me. It helps you plan and set goals for sensible financial things that, let’s be honest, I keep forgetting about: such an emergency fund (for actual emergencies not because you fancy a holiday), pensions, income protection and even wills. You can set goals and it gives you recommendations; as well as sometimes suggesting financial products that might fit. It’s also designed by flexible and adjust around your earnings-which we all
Sorting out a Pension When Freelance
Did you know that 45% of self-employed people don’t currently have a pension? I went from a teaching career to a freelancing one: so basically from a pretty amazing pension to a non-existent one. A pension has been on my to-do-list for a while now so I decided to tackle it whilst writing this blog post and doing some of my own research!
After putting in mine and my husband’s salary to the app, it estimated I should be aiming to pay £153 a month into a pension. Which is £153 more a month than I currently pay! I like how it took my projected earnings into account for a realistic figure. It estimates this would give me a yearly pension of £22,617 when I retire (including my state pension) It estimated that without saving for a pension, would receive £8000 a year via a state pension. Which seems very little! So it’s clear that’s my first financial goal to get going with in 2019
After doing a bit of my own research into pensions, I didn’t realise that I could claim tax relief on my pension contributions-so it would actually benefit me to get going before April! If you’re a basic tax payer, you’ll get an extra £25 for every £100 you put in (according the money advice service)
Top Tips for Finding a Pension as a Freelancer
Pensions can be a bit of a minefield for us freelancers. There are private options (A SIPP-a self-invested personal pension) of course but I was quite surprised when researching that you can actually join the government’s NEST scheme-which is the usual workplace pension scheme.
As long as you are between 16-75, working in the UK and registered as self-employed you’re probably eligible to join (more info here). What I like about this is that you can put as much or as little in each time you’d like-although I do think sticking to the goals suggested from Multiply would be best; I have to be realistic and all being well in the summer I’ll be on basic maternity allowance after the birth of my first baby-so there might be some months where I’d struggle to contribute. There are also private SIPP schemes designed for self-employed folk-like Pension Bee.
At the moment, Multiply doesn’t have a section for recommended pension products-but they’re hoping to have this feature this month; so hopefully that will uncover even more pension options!
Savings as a Freelancer
Obviously with a baby on the way next year, savings are on my mind! I was going to cover this in a separate post but I’ve been looking into maternity allowance (happy to do a separate post on this if there’s many self-employed mums-to-be like me?) and at just over £140 a week, I know I won’t be able to have much in the way of maternity leave.
I know the sensible thing is to work right now and save like mad! On the app, I have set myself a goal for a maternity ‘buffer’ (basically the difference between my average salary and maternity allowance as for 3 months as I’ll probably only take that much time off) and the app gave me a breakdown of how much I need to start saving now to achieve it!
The app really handily gave a list of independently recommended saving products that could fit my needs My current saving account has pretty much 0% interest but the app recommended two 1.4% saving accounts that I will now look in to!
If you’re planning on going freelance, I know 3 months salary is sometimes seen as a good buffer. However, it doesn’t have to be 3 months salary. A good tip someone told me is to think of your ‘ramen’ money: in other words, set a target for what you’d need to save to live off noodles for 3 months-to just cover your basic bills in other words. I presume it meant budget noodles rather than Yo Sushi. You might find this figure is a lot lower than you think! It’s probably something we should all know in the back of our minds!
However, saving is often really unpredictable when freelancing is such a rollercoaster; so I’m thinking of also trying some ‘round-up’ apps. Basically, if I bought something for £2.70, the app would round it up to £3 and take 30p into my savings! This article explains more on how they work but as I’m forever popping things on my card-I’m thinking it could be a really good way to save so I’m off to download them.
Finally, the app suggested I should be paying between £18-£31 each month into income protection. I’ve not done this but considering I have a chronic condition-I guess I should! I was hoping it would recommend a personalised product for me (like savings)but it didn’t unfortunately (hopefully that’s on the cards!) so it was back to research. Unfortunately, being self-employed; you’ll need to show evidence for your earnings and you can’t protect all of it-more likely 60%. So if you couldn’t work, income protection would provide a percentage of your income rather than your highest earning month!
I hope these tips are useful for you. What finance issue are you planning to get to grips with as a freelancer? Let me know your thoughts below! Don’t forget to download the Multiply app to get to grips with your freelancer finances in 2019!
This is a sponsored post in partnership with Multiply. As usual, all opinions aand words are 100% my own.