FINANCIAL FOCUS: Self-employment rewarding with the right money moves | Local News

Build an emergency fund. When you work for a business or other organization, your income is predictable — but that’s usually not the case when you’re self-employed. And when your earnings are uneven, you can be vulnerable to financial stress when you face an unexpected expense. To help protect yourself from these threats, try to gradually build an emergency fund containing a few months’ worth of living expenses, with the money kept in a liquid, low-risk account.

Pay down your debts. Some debts, such as loans to help your business, may be unavoidable — and even productive. But other debts, especially those that can’t be deducted from your taxes and carry a high interest rate, are far less useful, so you may want to set up a repayment plan. With your other expenses, you might not be able to whittle these debts down as fast you’d like, but, over time, your efforts can pay off.

Put money aside for taxes. Because no employer is withholding taxes from your paychecks, you will likely have to make quarterly estimated payments. Plus, you’re responsible for all your Social Security taxes, which, if you worked for someone else, would be split between you and your employer. To make sure you’ve got enough money available to pay your taxes, you might want to set up a special account — one that’s not used for any other purpose.

Get proper insurance. Depending on the nature of your work, you may or may not need some type of business insurance, but if you have a family, you should certainly consider the need for life insurance, and you may also want to consider disability insurance.