How To Save For Work Breaks When You’re Self-Employed

by The Smarter Wallet on May 22, 2011

There are lots of advantages to being self employed. For instance, you can be your own boss, you can take control of your business and you can look forward to arranging your time off whenever you need or want to. But of course you won’t be paid for that time off when you do eventually take it. Whereas many employees can enjoy paid vacations, the same is not true of self-employed people.

How To Save For Work Breaks

So what can you do? Are there some ways in which you can make the time off easier to afford when you want to take it?

1. Plan for your vacation time as far in advance as possible.

This stands to reason. If you suddenly decide with a week’s notice that you want to take a week off work, you won’t have any time to prepare or plan for it. You may find yourself relying on your credit card to pay for the things you need while you are off work.

But if you plan ahead and gauge roughly when you are going to need your time off, you can start preparing for it financially as well. Depending on the nature of your business, you may end up with a quiet period both before and after you have time off too, which you will also have to plan for. This would apply more to independent contractors who take on creative work, for example.

2. Set up a regular fund and deposit vacation money into it.

This is by far the best way to prepare for some time off from your self-employed position. You can start by figuring out how much you normally earn during a week long period, taken on average over the whole year. If you think about how much time you would like to take off over the year, you can start saving some cash every month. Build up your vacation fund by knowing how much money you plan to spend when you take your vacation.

Get a good bank account with a reasonable interest rate that you can also get instant access to. You don’t want a limited or restricted account that prohibits you from getting at the cash just when you need it. In short, keep your money in a liquid account.

3. Set up ways to keep on earning money even when you are on vacation.

This is known as residual income –- money that keeps on coming in even when you aren’t working. If you have a regular job and you work for eight hours a day, you get paid for those eight hours. If you are self-employed and you can set up residual income streams to earn money from, you can earn money 24/7 even though you may only be sitting at your desk for the same eight hours an employed person is. (But note that making money 24/7 can be translated into its 8 hour equivalent, of course. For example, if you make $10 an hour, 24 hours a day, that would be the same as earning $30 an hour for 8 hours.) As an example, you can make money online in a variety of ways.

4. Use travel deals.
Finally, make sure you take advantage of travel deals whenever you can. You can save money on your breaks by simply being resourceful and being aware of travel discounts. See if it’s practical to incorporate these deals into your plans.

So you can see, it is perfectly possible to plan ahead and make it financially viable and comfortable to take a vacation from a self-employed position. You just need to be prepared for it, so that any time off doesn’t take you by surprise. If you get it right, you shouldn’t need to rely on a credit card to tide you over during this time.

You’ll need to find your own way of getting ahead and planning for time off that will suit you. In the end, you may even be able to comfortably take the odd impulsive day off as well –- and why not? You’re the boss!

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