Managing your finances as a contractor: tax advice and budgeting tips

Having a good grip on your finances is key when it comes to contracting, especially since your next role is never guaranteed. With the right organisation and advice, however, you can enjoy the benefits of contracting without having to worry about money. 

In this blog, we share top tips on managing your finances as a contractor, including tax advice and budgeting tips. 

1. Weigh up umbrella vs. limited

If you’re new to contracting, you need to decide whether you want to work through an umbrella provider or set up your own limited company. While setting up a limited company means you have complete autonomy over your finances, it also means you are responsible for submitting your tax returns and paying other relevant expenses. On the other hand, working with a compliant umbrella company means you don’t have to worry about your finances because it will all be done for you! Find out more about the perks of becoming an umbrella contractor here. 

2. Set up a rainy-day fund 

Putting a portion of your paycheck aside each month is a really good idea for contracting professionals, as it means you have something to fall back on if you find yourself between projects – or want to take some well-deserved time off! We’d recommend using an app to help you stay on top of budgeting such as Starling or Monzo. 

3. Consider salary sacrificing 

This is an arrangement between you and your employer whereby you exchange a percentage of your salary for employee benefits such as pension schemes. Most umbrellas (including Mint!) will ask if you want to opt in for an arrangement like this. Again, if you choose to work independently then you need to be self-disciplined when it comes to saving for the future. 

4. Make a spreadsheet 

Nothing is more thrilling than creating a spreadsheet to organise your finances, right? All jokes aside, this will benefit you in the long run and allow you to enjoy your disposable income without feeling guilty. Work out roughly how much you need for the essentials such as rent/mortgage, food and bills and then you can get to the fun part!

5. Have two separate accounts

Having one bank account for your essential expenses and one bank account for your personal outgoings is a really helpful way to ensure you’re not overspending money you don’t have. 

Want to work with Mint? Drop us an email via [email protected] today and a member of our team will be in touch.