Why Self-Employed Need and How to Build Emergency Funds

### Why Building an Emergency Fund is So Key for the Self-Employed Feast vs Famine of This Type of Work and How Self-Employed Can Best Build the Emergency Fund Being self-employed comes with its own set of unique challenges. The feast or famine nature of this type of work means that one month you might be flush with cash, and the next you could be scraping by. This makes having an emergency fund absolutely essential. Here's a look at some of the problems self-employed individuals face and recommendations to address them. #### Problems 1. Inconsistent Income: Unlike a regular job with a steady pay check, self-employed individuals often deal with fluctuating income. This can make it difficult to budget and plan for the future. 2. Unexpected Expenses: From equipment breakdowns to sudden health issues, unexpected costs can pop up at any time. Without an emergency fund, these expenses can quickly become overwhelming. 3. Difficulty Accessing Credit: Self-employed individuals may find it harder to qualify for loans or credit lines due to their irregular income. 4. Lack of Benefits: Traditional employees often have benefits like paid sick leave or health insurance. Self-employed individuals need to cover these costs themselves. #### Recommendations 1. Start Small and Build Gradually: Begin by setting aside a small percentage of your income each month. Even starting with just 20 can make a difference over time. 2. Automate Savings: Use banking apps like Cashplus, Starling, or Tide to set up automatic transfers to your savings account. This ensures that you consistently contribute to your emergency fund. 3. Separate Accounts: Keep your emergency fund in a separate account to avoid the temptation of dipping into it for non-emergencies. 4. Review and Adjust: Regularly review your financial situation and adjust your savings rate as your income changes. #### Suitable Banking Options for Building an Emergency Fund 1. Cashplus Bank: This mobile banking app offers a business account option that is FSCS protected, meaning your money is safe. Most accounts are opened on the same day, and you can potentially access overdraft and credit facilities. However, you cant cash in cheques or send international payments, and there are no physical branches or 247 customer service. 2. Starling Bank: Another mobile banking app with a business account option, Starling offers no subscription cost, 247 support, and fast payments with no charge for standing orders. Its highly reviewed and has no monthly or transaction fees. However, some features are only available through the business toolkit, cash deposits at post offices carry a charge, and there are no physical branches. Also, Starling spaces don't pay interest on business accounts. 3. Tide: Tides app is simple to use and allows for easy money management. You can create business invoices and share details within the app, and it has strong security measures. However, there is no direct customer service, no international money transfers, and it may not be suitable for some businesses and startups due to limited features. #### Conclusion Building an emergency fund is crucial for self-employed individuals to navigate the ups and downs of irregular income and unexpected expenses. Using mobile banking apps like Cashplus, Starling, and Tide can make the process easier and more efficient. Each of these options has its own set of benefits and drawbacks, but they all provide valuable tools to help you manage your finances and build a safety net for the future.