How to manage your finances effectively if you’re self-employed

Posted 16.02.2022

Being self-employed allows you to have the flexibility with how you manage your time, but when it comes to managing your finances, things can be a little riskier. According to the Office of National Statistics[i], 15.3% of the UKs workforce is self-employed, and there is little being done to encourage the self-employed to save into their pension in the same way as auto-enrolment encourages contributions to workplace pensions.

This article offers helpful pointers on how to manage your finances if you’re self-employed and why investing into a pension early can help you achieve more financial security when you retire.

Planning for retirement when you’re self-employed

The proportion of self-employed workers paying into a private pension has fallen from 48% to just 16%, according to the Institute for Fiscal Studies. [ii] There are several reasons for this, including their exclusion from auto-enrolment and the fact that self-employed can be so focused on earning an income and running their business that they often forget about financial goals in the future.

Spread the risk

Many self-employed people believe that the value of their business, or the income they generate will see them through to retirement, but this is leaving you exposed to a lot of risk, particularly if the business performance suffers or there are economic changes that you don’t have control over.

Financial strategies for retirement

It is important to have a Financial Adviser as part of your support network to help provide guidance on how much you should be saving each month, and how best to invest in the most tax efficient way into your pension.

Get invested

In addition to a pension, another way to start investing if you’re self-employed is through with a Stocks and Shares ISA. You get an allowance of £20,000 per annum which can be saved into an ISA, so it’s another way to make sure you’re on track to reach your financial goals and put money away for your future.

Being self-employed can be hard work, so you want to make sure your money works hard for you too. With a little planning and the right financial advice, you can help make your hard earned income work for you right through to retirement.


The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

[i] Statista Dec 15, 2021

[ii] IFS, Retirement saving of the self-employed, October 2020

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