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Being self-employed is the best feeling in the world. Whether you are a freelancer or an entrepreneur, doing what you love feels empowering. 

The best part? 

It comes with a host of perks and benefits to not only you but your family too. There is absolutely no limit to how much money you can make when you are work for yourself.  But as they say, no pain, no gain.

The landscape is inherently risky. There is no steady income, no employer-sponsored medical coverages, and no other benefits. In short, no stability. 

But it doesn’t have to be that way. 

With a little planning and discipline, you can take out the turbulence and create a more stable financial freedom landscape. So, how do you plan for your future?

This post will demystify every viable and high ROI (return on investment) opportunity that you can tap into to create your most stable financial life. Let’s dive right in. 

Top Savings Strategies for the Self-Employed in 2021 

The first fundamental element of creating an efficient savings strategy for a self-employed person starts from mapping their income. At the onset, this idea might look a little fuzzy but give it some serious thought.

More often than not, the average income base of any self-employed person is better than an employed person. So use the surplus to create new channels of finance. But ensure that you systematically categorize each investment in long-term, mid-term, and short-term goals. 

This will help you to stay consistent throughout your life. Now, let’s dive into some of the top-performing savings strategies for any self-employed person in 2021. 

1. Diversify your investment portfolio

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The idea behind a diverse investment portfolio exactly means the same as it sounds. But why do you need to spread your investment categories wide? Why can’t you go narrow and deep? No matter how promising and futuristic an industry asset might be, each one of them is inherently risky. The market for one industry cannot go steep up at all times. This makes diversifying your investments across industries a smart strategy to ensure you can enjoy a steady financial status. Here are few ways you can obtain this. 

1. Cryptocurrency: By all means, the cryptocurrency looks like the future currency. However, that future will take time to come. This makes bitcoin technology perfect for investments of today. However, here’s the thing. Cryptocurrencies are volatile. The more the spikes, the more the risks. If you are new to crypto, investing in stable coins is your safest bet. Tether, USDC, TrueUSD are few popular amongst crypto investors. 

The best part is starting your crypto investment profile is hassle-free and can be done from your home. You can get USDC on Moonpay with utter ease. The platform powers global crypto wallets with a total on-and-off-ramp solution. 

2. Gold: Investing in gold is one of the best long-term investments and for good reasons. Having physical gold assets creates a hedge against market fluctuations. However, the real ROI is witnessed when you start investing in digital gold and gold ETFs (exchange-traded funds). 

3. Stock and mutual funds(MFs): Stocks, without a doubt, are strong investment propositions. But to gain the real ROI hare, a mid-term of 10 years is required. However, the wait is worth it. The returns are much higher than any regular investment plan. The same applies to mutual funds. The only added merit here is that MFs can add short-term value being tax-efficient in the process.

4. Real estate: If there is one investment that never falters, it is real estate. This is the most efficient long-term passive income that you can reap in time. But you need to be strategic. For instance, investing in commercial land has a better ROI than residential. But the maintenance costs are higher. 

2. Create multiple income channels

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If there is one thing that Covid-19 has taught the global population, it is not to depend on one source of income. Having more than one income stream ensures that you do not face a crisis when one stream doesn’t perform well. This way, whether it is in the long-term, mid-term or short term, you will never face financial hiccups. Here are a few proven ways you can consider. 

1. Blogging: Blogging is perhaps the most efficient and hassle-free way of gaining passive income. You can use your knowledge or expertise in your industry to monetize an audience that you created over a couple of years. The investment here is relatively much lower, but the yields are high. Here’s what you can do. Affiliate marketing is a smart way to monetize your blog. But if you want to start a little fast, selling online courses is another way to do so. 

2. Internet business: Having an internet business is yet another way to have a passive income. You can start a consulting business or an Amazon business in no time. You can create your business site on Shopify to become an Amazon affiliate or choose to sell directly on Amazon. All you need is a high-speed internet connection and a great domain name. 

3. Venture fundings: Having your business is great. But if you can reap benefits from others’ business, then why not? Venture fundings create a proven road to do so. The only thing you need to be careful about is investing in industries that you understand enough about. Otherwise, it is super inefficient to gauge the company’s viability if you have no understanding of the product. Angellist is a great platform to do so. 

3. Plan for long-term savings

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Ensuring absolute security in critical areas of life, like health, home, education, and retirement is something you cannot afford to miss. This makes it crucial for you to plan for them from an early stage. But while you plan, it is essential to understand that all of these planning and strategies are only for your distant future. 

Touching them mid-term will only compromise your goals. Remember, securing a safe long-term future starts with discipline. Here are a few ways to plan for your long-term savings:

1. Insurance policies: Insurance policies are an absolute need for long-term investments. From health to car insurance, you can find many. But, you need to invest in the ones that are foundations to comfortable living. Health, retirement, and home insurance are a few that you wouldn’t like to miss.
   
2. PPF funds: If you want to incur a tax-free income in the long term, missing out on a personal provident fund is not a smart decision. Not only is it tax-free, but it is one of the highest ROI assets as far as regular investments are concerned. 

4. Create an annual budget

Having an annual financial projection is critical for the efficient planning of your investments and securities. Without having a clear idea of your annual income, planning your long-term savings is almost impossible. 

But a word of caution here. Your annual income as a self-employed person will be completely different from being employed in a company. This means you only calculate the resources you know are steady and generate a fixed monthly revenue to reach annual goals. Here are a few considerations you can use. 

1. Optimize maintenance costs: Mapping your maintenance costs is the first step of creating a stable financial landscape. You can start by listing out all your monthly liabilities and costs and then prioritizing necessity from luxury. This will create a scope of optimization. Remember, you have to be honest about your needs and greed. A lifestyle item is not your need. Similarly, cutting down on your food costs is not something you would want to do. 

2. Optimize taxes: Being cognizant of your tax deduction is one powerful method to optimize your finances. Understand the tax benefits of your annual income and if you are eligible for an input tax credit. Not only can you lower your total tax liabilities, but you can also ensure your resources are distributed in a way that benefits you. 

5. Build an emergency fund

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Having an emergency fund set up is essential for self-employed people. Think of a situation where your business is suffering losses. Worst, it is unable to acquire clients. So, what do you do? If you are not saving a portion of your monthly income for critical situations like this, there are high chances you are betting on your future. Here’s how to bring stability instead. 

Invest in savings options that allow you to break the tenure before the completion date. This ensures that you can use your money when it is required the most. 

A pro tip is to ensure that you create an emergency fund to cover all your maintenance costs and liabilities smoothly for 6 to 9 months. This will keep you stress-free and actively work on a solution. Here are a few considerations for the same. 

1. Bond funds: Bond funds have an impeccable reputation of being safe. This makes them a viable option to be one of your long-term investment assets. What’s best is the ROI that it returns over an extended period, a minimum of 15 years. 
2. Forced savings: Forced savings like recurring deposits and Flexi-RD are great ways to strengthen your emergency bank. This way, you can reach your emergency goals without feeling the pressure. 
3. Fixed deposits: Fixed deposits are a great way of saving a portion of your annual surplus amount. When you are a self-employed person, this becomes even more significant. Saving at the end of the year makes it easier for you to gauge the amount you can keep in a fixed deposit account. 

Parting Advice

Now that you know some of the best ROI channels for your financial freedom, it’s action time. The secret to reaping the benefits lies in acting now. 

Having healthy finance is just like having a healthy body. You may not be able to gain the desired results overnight. However, with a little discipline and good habits, your finance can benefit from compounding interests over time. All you need to do is prioritize your financial planning and be consistent with it. 

Author bio

Atreyee Chowdhury works full-time as a Learning Experience Designer and is passionate about writing. She has helped many small and medium-scale businesses achieve their content marketing goals with her carefully crafted content that is both informative and engaging. She lives in Bangalore, India with her husband. She loves to read, experiment with different cuisines, travel, and explore the latest content marketing and L&D trends in her free time. You can reach her on Linkedin or write to her at [email protected]