About 15% of Singapore’s workforce is self-employed, which comes to more than 300,000 people. Traditional financial advice doesn’t work for people working for themselves, a considerable fraction of the population. Employed people often do not have to manage things like health insurance, Medicare, and retirement savings on their own.

If you are setting up your own business, consider getting a small business loan from a licensed moneylender. If you’re in a fix on how to manage finances being self-employed, read the following tips.

Set up a basic budget

It is hard to predict a reasonable, fixed income when you’re self-employed. In this case, determine a minimum amount of money required for subsistence. This will include housing, food, utilities, and other important expenses. Frugality is essential in the initial months, and one must keep their spending minimal.

Think percentages and not dollars

In the first few months, your income will fluctuate often. Allocating a specific amount of money to your retirement account or emergency fund is erroneous. It will result in saving too little in high-profit months and too much in low-income ones. Designate your income to three important heads—taxes, emergency savings, and retirement. Set aside 10% every month for the emergency fund, regardless of income.

Create an emergency fund

One can never stress enough on creating an emergency fund, and it is even more important for the self-employed. The objective of an emergency fund should be to provide financial cover for at least 3-6 months. Remember to use the emergency fund as a last resort. In case of a minor emergency, consider getting a personal loan from a moneylender.

Use better financial months to compensate

There will be months where you will double, or even triple, your average income. Keeping this in mind, many financial experts suggest what is called giving yourself a salary. Dedicate whatever percentages have been decided to taxes and other funds to their accounts, pay yourself your salary, and put the rest in an overhead account.

Make taxes a priority

The old axiom of paying yourself first is redundant in the case of self-employed individuals. While those employed and with a steady salary have their taxes usually withheld, you will have to pay yours yourself. If you fail to set aside tax money, you could face massive unanticipated tax debts. To avoid underestimating what you owe, set around 35-40% of your returns for taxes.

Use the moneylender smartly

Proving credit worthiness while you are self-employed may not be easy at the beginning. Some experts say that paying your credit card bills on time to bolster your financial responsibility. However, reliance on credit card purchases is not ideal for the self-employed. Borrowing from a licensed moneylender is possible even with a weak credit score. Moneylenders also offer flexible payment terms.

Think twice before automating bill payments

When it comes to working for an employer, bills should be automated to avoid mounting of debts. However, the self-employed generally do not have a payday. Instead, whenever a payment comes in, divert pre-decided percentages to taxes, bills and the emergency fund. It is a good idea to have multiple accounts, even though the proposition of a single savings account may sound simpler.