Resist temptation “It is imperative to avoid the trap of incurring monthly expenses for unnecessary luxuries after one or two months of high income,” cautions Lizl Budhram, Old Mutual’s advice and regional support manager. Be absolutely sure that you can afford the long-term expenses before buying that expensive new car you’ve been longing for. Savings products Saving requirements are more or less similar for everybody, regardless of how you earn your income. “Since Beatrice has a variable income, it is important that she chooses a product with flexibility,” Budhram points out. It would be better for Beatrice not to commit to a fixed monthly investment amount as this may result in unnecessary penalties or costs. Ask your financial adviser for product options where the monthly or yearly savings amount can be varied in terms of your cash flow and also where payment holidays are possibly an option. Make sure you understand and are comfortable with the cost that comes with this flexibility. Income tax This becomes significantly more complex than that of a salaried employee. Budhram advises that you should seek professional accounting and tax services. Do this as soon as possible and find out what you need to keep track of. For example, invoices, your mileage log, your medical expenses, your fuel expenses and so on. This way, you can avoid any nasty surprises when tax season comes. Business planning “It’s also important to speak to a financial adviser about business risks inherent to your business. “Make sure provision is made where appropriate, such as provision for the continuation and ownership of the business in the case of the death or disability of one of the owners or partners, as well as provision for bank loans being called up unexpectedly if the person who stood surety for the loan passes away,” she says. Track your expenses A common mistake many people make is to underestimate what they spend. You can avoid this error by tracking your expenditure over one or two months. Keep all your payment slips and find out exactly where your money is going. You may be surprised at how much you spend on fast food and entertainment. Those lunchtime runs, movies and magazines add up to a hefty total that is easy to underestimate. If you budget R500 for entertainment expenses, movie tickets and dining out with friends, but actually wind up shelling out R1?000, you need a reality check. Pay yourself first Whether you earn inconsistent income or a straight salary, this golden rule still applies. As a freelancer, entrepreneur or small-business owner, you don’t have the option of an employer-based retirement plan. This means the onus is entirely on you to make sufficient plans for your retirement savings. Again, if you invest in a retirement annuity, make sure it is a new-generation product that allows you flexibility to stop payments without incurring high penalties. Maternity leave If you’re a self-employed woman like Beatrice, you also need to set aside savings so that you have an income during the months of maternity leave. Remember that there’s no employer to offer you paid maternity leave, so this becomes another financial consideration for you.