My Money by Modern Work

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Launch Edition

AUTUMN 2017

IPSE my money Magazine

And at IPSE, we have been listening to your concerns: about pensions, mortgages, accounting, personal finance and all other money matters. That’s why alongside all our other work to support and protect you, the self-employed community, we are now delighted to introduce our new magazine, My Money.

oaring inflation. The cost of living crisis. IR35 changes. Brexit. Looking around, it can seem like the threats to the financial security of the self-employed are multiplying by the day. Being selfemployed has always carried more risk, but right now this vital sector is bounded by a sea of troubles.

With invaluable insights covering everything from managing your business to saving for later life, My Money is designed to help you navigate all aspects of freelancer finances. It may be more of a challenge to organise your finances as a selfemployed person, but My Money will make it manageable with the

best advice and guidance from across the world of freelancing. For this first issue, we’ve gathered a selection of articles from our partners, including Experian, CMME, Kingsbridge, Close Brothers and Intuit Quickbooks. And as we move through more issues, we’ll get analysis and advice from even more partners and experts, covering all aspects of freelancer finances. For the moment though, I’m very proud to introduce our inaugural issue. I hope you enjoy it. James Collings IPSE Chairman

5 KPIs to help your company stay in shape

How do you define success?

Find the easy route to a self-employed mortgage

How to get paid on time - 7 tips

Protecting your business from cyber-attacks

A chance of a lifetime for young savers?

The hidden barriers to starting a business

Interview: Katy Carlisle

The perfect sandwich

Quiz: what kind of saver are you? IPSE my money Magazine

ACCOUNTING

Content provided by

INTUIT QUICKBOOKS

FIT FOR BUSINESS 5 financial KPIs to help your company stay in shape

How healthy is your business? You might think things are ticking along nicely, but you need to be sure. Keeping close tabs on your business’ financial performance is the secret to long-term success and that’s where financial Key Performance Indicators (KPIs) come in. By calculating and comparing these five basic figures, you can identify the areas of your business that are fighting fit and those that need some TLC.

1 Gross profit margin Are you pricing goods or services appropriately? Your gross profit margin should give you a good idea. It’s calculated using the following equation:

(revenue-costs) revenue The costs deducted from the revenue include direct materials, staff and product overheads, but don’t include general business expenses. This means your gross profit margin needs to be large enough to cover all of your operating costs (and leave you with a decent profit).

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2 Net profit This is your bottom line: the amount of cash left over after you’ve paid all the bills. Take your total revenue and subtract your expenses for the result. Example of net profit calculation: Sales:

£100,000

Outgoings: (rent, stock, salaries, utilities, etc)

-£80,000

Net profit:

£20,000

It’s vital that your net profit covers your personal needs (including your own salary) and leaves enough to build the reserves you’ll need during slow periods. Many companies borrow money to help smooth out seasonal fluctuations and keep them going during dips. For a more detailed picture, look at the net profit achieved by specific services or products.

3 Profit margin Work out what percentage of your revenue is profit and you’ll find it easier to project growth and set goals and benchmarks. The equation is simple:

Net profit Total revenue

Average profit margins vary significantly between different industries. Financial services, pharmaceuticals and property, for example, have sky-high profit margins, while others are more modest. Assess your performance against industry standards as well as making your own year-on-year comparison. If the number is particularly high or low compared to earlier years or your competitors’ results, it’s worth investigating the cause.

4 Ageing accounts receivable If you send invoices to customers, you should also run an accounts receivable ageing report (standard in most accounting software such as QuickBooks). Some customers will always pay their bills within a month but others may drag their payments

out to 90 or 120 days. If this is causing cash flow problems, consider charging interest on overdue accounts or letting slow-paying clients go. You could also consider invoice financing to help you capitalise on outstanding invoices and boost your cash flow.

5 Current ratio Do you have enough money coming in to pay your bills? Divide your assets by your liabilities for an advanced warning. The result, known as the current ratio, should be a number between 1.5 and 3. Watch out if it falls into the danger zone between 1.5 and 1 – less than one and you won’t have enough cash to settle your debts. If you suspect that your operating expenses have been creeping up, it’s a good idea to compare them to previous years. Run a report using your accounting software to identify the biggest percentage increases over time.

Get a step closer to meeting your business goals with QuickBooks. Send invoices from anywhere to get paid faster, snap receipts to reduce your data entry and get an instant snapshot of how your business is performing, all from just £7.50/month for the first six months, exclusively for IPSE members. Visit quickbooks.co.uk/ipse/ to learn more & get started.

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How do you define

Being able to work from wherever I want?

SUCCESS

when selfemployed?

Being able to make a big purchase?

Feeling that I can earn as much as my peers who are employed in similar fields?

Feeling in control of my finances, and having peace of mind?

Work / life balance: choosing the hours I want to work?

Over to you - how do you define success when self-employed?

Scoring big clients?

Tweet @TeamIPSE with the hashtag #MyMoneyMag Being able to book a holiday without worrying about the risk? IPSE my money Magazine

MORTGAGES

Content provided by

CMME

FIND THE EASY ROUTE TO A SELF-EMPLOYED MORTGAGE

ortgages. Securing one can be a daunting challenge at the best of times. But for self-employed professionals, it can seem so daunting that many are actually put off the idea altogether, choosing instead to rent for the foreseeable future. But is it really that difficult for independent professionals and the self-employed to get a mortgage?

1: Know your contract and make sure it is up-to-date

Well, not necessarily. Of course, working contracted hours can make getting accepted for a mortgage a little more complicated. But CMME have a whole range of hints and tips to improve your chances and make the whole process easier. Here are just a few to get you started:

2: Avoid big breaks between your contracts

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If you’re thinking of starting a mortgage application, make sure you have a copy of your most up-to-date contract to hand. You need to be able to show lenders not just your income level, but also how long you’ve got left on your current contract.

Working as an independent professional has many perks, not least being able to take a break between your contracts. For many, it’s the perfect opportunity for holidays and globe-trotting. But make sure your breaks aren’t too big.

Do your best to avoid breaks of more than 6-8 weeks. And if you are going to take big breaks, make sure you don’t make a regular habit of it. Lenders want to see consistent income and contracts stretching back 12-24 months, so they don’t tend to look favourably on significant gaps. 3: Be realistic and keep things affordable One mistake many independent professionals make when looking at mortgages is that they’re unrealistic about their repayments. All too often, they overestimate what they can afford to pay. Lenders see right through this: when you’re putting your mortgage application together, make sure the repayments you’re proposing are actually affordable.

4: Pay at least a 10 per cent deposit When you’re applying for a mortgage, you need to be ready to pay a fairly sizeable deposit. Nowadays, most lenders will ask for at least 10 per cent. 5: Avoid high street lenders For many independent professionals, high street mortgage lenders are where the difficulties start. Although you might find that your first-stage application to a high street lender is accepted in principle, this is most likely because their initial credit checks are very light and superficial. It’s at a later stage, when you’ve placed an offer on a property that they’ll generally do the more thorough checks and withdraw the mortgage offer.

To make sure this doesn’t happen, do your homework and look for specialist lenders and brokers. Companies with experience and specialist expertise in contractor mortgages are a much safer bet, and a specialist mortgage broker like CMME is a good place to start. 6: Find mortgages that allow additional payments Fluctuating incomes are a staple for many contractors. You’re sometimes much busier, or just have particularly high-value contracts. The up-shot is that at certain times you’ll have a lot of extra cash, so if possible, find a mortgage that will allow you to pay off extra chunks of the overall amount on top of your monthly repayments.

It will help you make the most of your income and pay off your mortgage much more quickly. There’s no doubt that contracting makes finding a mortgage that extra bit more complicated. But there’s plenty you can do to improve your chances and make things easier for yourself. For even more tips and advice, visit cmmemortgages.com/ipse. IPSE are not authorised to offer regulated mortgage advice. IPSE are introducers to CMME. Your home may be repossessed if you do not keep up repayments on your mortgage. CMME is a trading name of CMME Mortgages and Protection Limited. Authorised and regulated by the Financial Conduct Authority (FCA reg. 414798). Registered in England No. 04886692. Registered Office: Albany House, 5 Omega Park, Alton, Hampshire, GU34 2QE. Please be aware that Commercial Mortgages, Overseas Mortgages and some Buy To Let Mortgages are not regulated by the Financial Conduct Authority. Calls may be recorded for training and security purposes and to improve the quality of our services.

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CREDIT

Content provided by

EXPERIAN

HOW TO G E T PA I D

ON TIME C

ash flow is the life blood of your business. You could be hitting all your revenue targets but if you haven’t got any cash in the bank then you can still get into financial trouble. New government regulation from April 2017 requires all large companies and limited liability partnerships (LLPs) to publicly report their payment practices, including average time taken to pay supplier invoices. Margot James, small business minister,

said: “The UK is home to a record 5.5 million small businesses and the industrial strategy will help address many of the challenges they face getting finance and scaling up. It’s completely unacceptable that small and medium-sized businesses are owed £26.3 billion in late payments, which hampers their ability to grow and has no place in an economy that works for all. ”Managing your cash flow needn’t be tricky. It’s just a case of keeping track of what is coming into your business in the form

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of revenue versus what’s going out in the form of bills, wages and other expenditure. If you have more money coming in, then your cash flow will remain positive and your business can continue to thrive. It’s good practice to forecast and plan your cash flow so you can see in advance what money you will need to spend, what money is owed to you and therefore, what you have available to invest in developing your business. One key factor that impacts cash flow is getting paid – and getting paid on time. If your customers pay late (or not at all) then all your careful planning and forecasting goes out the window. Of course, there are steps that you can take which will improve your chances of being paid on time. By following these tips, you’ll be much more confident about being paid on time and keep your businesses’ cash flowing. To see how company credit checks can help your business visit engage. experian.co.uk/ipse/home and see the full range of our easy-to-use services today.

Experian Business Express is perfectly placed to help UK SMEs protect and grow their business. Unique in our approach, we are part of a global organisation, but still run as a SME for SMEs. We have been helping UK businesses for over 20 years to protect and grow their operations. Every day, over 32,000 small and medium businesses rely on us to make informed business decisions.

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Credit Check

It’s now easier than ever to check the financial history of a customer before you work with them. Services such as Experian Business Express, allow you to credit check both UK and international companies to assess if they will meet their financial commitments and lending requirements.

Set expectations up front

Decide beforehand when you want to be paid. This should be based on when you need to be paid to meet your own financial obligations. You should also consider your industry and what a realistic and reasonable payment time will be. Once you have decided your payment terms, make sure you communicate these clearly to your customer.

Consider offering payment plans

This can have two advantages. It makes it easier for your clients to spread their costs and maintain their repayments to you and it also spreads out the money you have coming in so you have regular, consistent income rather than sporadic lump sums.

Invoice promptly

Make it easy to pay you

Use the carrot and the stick

Let accounting software do the hard work

Don’t create hold-ups at your end by sending your invoices through late.

Allowing online payments makes it easier for your clients and means that the funds will hit your account sooner.

By offering incentives for early payment and enforcing penalties for late payments, you can encourage your clients to prioritise your invoices.

These days you can get software that will automate your invoices. It’s also possible to set up email reminders. Save your self time and automate as much as possible.

IT ONLY TAKES ONE Are you covered? 75% of small businesses in the UK have suffered security breaches in the last year. Make sure you have the right support in place to help in the event of a cyber-attack. Introducing Cyber Liability Cover from Kingsbridge Contractor Insurance. Only ÂŁ74.50 per annum*

*Price shown excludes insurance premium tax at 12.5%. Cyber Liability insurance is only available when purchased alongside our standard contractor insurance package. Kingsbridge Contractor Insurance is a trading name of Kingsbridge Risk Solutions Ltd. Authorised and regulated by the Financial Conduct Authority. Registered in England No. 4122238

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Helping you plan for your future Save for your retirement with IPSE pension partner Aegon.

Benefit from the special negotiated group rate of 0.43%*

Investment made easy with Aegon’s Retiready platform

Visit www.ipse.co.uk/futures 14

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Access a range of retirement saving options, including ISAs

call Aegon on 0345 680 1234 quote “IPSE Pension” *Rate applies to standard package, rate may vary depending on contribution level and account settings

INSURANCE

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KINGSBRIDGE

PROTECTING YOUR BUSINESS FROM

CYBERATTACKS IPSE my money Magazine

There are certain trade-offs to be made when you live in a world with all the information you’ll ever need just a click away. The introduction of the Internet, and the advent of the digital frontier, changed our lives forever but we often take the level of access we have for granted...

he vast majority of people wouldn’t leave their house unlocked, or their keys in the ignition, or leave their most valuable items out in full view. And yet, for whatever reason, almost all of us are guilty of not taking the same amount of care on our computers, in our databases, and with our online presence. Whether it’s using the same password over and over, failing to keep systems up to date, or not having adequate insurance cover in place, we have become complacent. We see cyber-attacks in the news, but we think it’ll never happen to us. Unfortunately, that’s not the case. Contractors, freelancers and the self-employed are as vulnerable as anyone else. Evidence has shown that almost three quarters of small/medium enterprises (SMEs) will experience a digital breach at some point in their career. Here are some tips on how to prevent this from happening.

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Be vigilant!

We’re generally well-versed when it comes to spotting spoofs and fakes. But the people and groups looking to exploit individuals are getting smarter all the time, and it can sometimes be quite difficult to gauge the difference between something legitimate and something fraudulent. If you receive an email you’re not sure about, trust your instincts. Check the email address it came from and compare it to others you’ve received previously from the same company. Hover over links in the email to see if the URL

seems reliable. Search for anything that looks suspicious before clicking any links. None of these things take long to do, but it could save you a world of trouble further down the road.

Keep up!

You know how frustrating it is to look at your phone, your browser plug-ins, or your computer toolbar and see a bright red circle? They’re annoying for a reason – they’re there to make sure you keep your security software up-to-date.

Pass w

ord:

The risk of being infected by ransomware falls significantly as long as you follow the basic computer security steps. Ensure that patches and updates are installed as they’re released by software firms. Vulnerabilities in operating systems, web browsers, apps, and plug-ins are often exploited by hacking groups, especially if those flaws have been known about for some time. As the National Cyber Security Centre website notes: “Software providers will have made patches available to mitigate them. Deploying these patches, or otherwise mitigating the vulnerabilities, is the most effective way of preventing systems being compromised.”

Stay secure

you first, and you can make sure you’re happy with what is being installed. Do you share the computer you work on with someone else? It could be a friend, a family member, or someone you’re working for on a short-term basis. Whatever the situation, it’s always a good idea to keep that computer secure. Use a password generator like LastPass to get some stronger protection in place, or set yourself up as an administrator on your computer and require authorisation when someone wants to install software. That way they’ll have to ask

Think about setting up a website filter, which will minimise the chance of anyone clicking on a website that could contain a virus. Having the right insurance in place is essential too. Cyber Liability cover from Kingsbridge includes protection against business interruption, cyber-extortion and ransom, as well as assistance with system and data rectification and cover for regulatory defence and penalties. Give us a call on 01242 808740 to find out more. IPSE my money Magazine

IPSE my money Magazine

In 2017 we had our most successful NFD to date with more than 350 guests joining us to celebrate in London, Bristol and Manchester. We welcomed speakers from companies such as LinkedIn, HSBC, Close Brothers and Freelancer.com and ended the event with our annual IPSE awards ceremony.

So join us at Kings Place, London, for our annual flagship event: National Freelancers Day, on Thursday 28 June 2018. We’ll be celebrating the very best of the UK’s most exciting, driven and enterprising self-employed, bringing together freelancers, contractors and independent professionals for a day of workshops, seminars, panel sessions and networking.

IPSE my money Magazine

ASSET MANAGEMENT

Content provided by

C LO S E B R OT H E R S

A chance of a lifetime for young savers? With its new Lifetime ISA, the government is providing a financial incentive in the hope of getting young people hooked on the savings habit. Sounds like an opportunity not to be missed? Well, yes and no. Ewan Pitcairn, head of Close Brothers adviser services, answers our clients’ most frequently asked questions about the new government giveaway for those under 40. Q: What is a Lifetime ISA? A: The Lifetime ISA is a new savings vehicle, which was launched by the government in June 2017. If you (or your children or grandchildren) are over 18 and under 40, the Lifetime ISA is worth knowing about. Open a Lifetime ISA and you could get a free government pay out of up to £32,000. It allows you to save up to £4,000 every year until you are 50. For every £4 you save, the government will give you a £1 bonus. To claim the bonus, you will either need to use the money to buy your first home, or wait to withdraw your savings when you are over 60. Pay in the total allowance for the full 32 years (between 18 and 50) and you could amass £128,000 (before any interest or growth) plus £32,000 from the government bonus.

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Q: Is saving into a pension or a Lifetime ISA better?

salary to pay into the scheme, you will also pay less national insurance.

A: In most circumstances, a pension will provide a better way of saving for retirement than a Lifetime ISA. This is particularly true if you have the opportunity to join a workplace pension scheme. If so, not taking your employer up on that opportunity is financial madness.

Another consideration is your current tax rate. If you are a top-rate tax payer, the 40 per cent or 45 per cent tax relief on pension contributions means saving into a pension is still your best option for long-term savings.

However, if you are a basic-rate tax payer, the Lifetime ISA could be an attractive option, Not only do you get tax relief with a workplace because the 25 per cent government bonus is equivalent to the tax relief you will receive on pension, but also a contribution from your a personal pension contribution. employer. If you are sacrificing some of your You should also consider what your retirement is likely to look like. With a pension, you receive tax relief upfront, but pay tax when taking the money out. With the Lifetime ISA, you get tax free withdrawals, but no immediate tax benefit.

Finally, think about how long you are willing to lock your money away for. You cannot take money out of a pension until you are at least 55. With a Lifetime ISA, you can access your cash at any time – although you will lose your government bonus and pay a five per cent penalty. Q: Should my children use the Lifetime ISA for retirement or a deposit on their first house?

and down to £10,000 for the very well paid). If, after saving the maximum into a pension, they still have money to put away, then they may want to save into a Lifetime ISA as well. Q: What is best – a Help to Buy ISA or a Lifetime ISA? A: As with the Lifetime ISA, the government will top up a person’s savings by 25 per cent when they save with a Help to Buy ISA. However, with the Help to Buy ISA it is only possible to save up to £12,000, with a maximum government bonus of £3,000.

A: If they are actively saving for a deposit on their first house, the Lifetime ISA is a very attractive option. When it comes to retirement planning, it depends on their circumstances On balance, the Lifetime ISA is likely to be the – for example, whether they are part of a best option in most people’s circumstances. workplace pension scheme or not. Not only can you save more into a Lifetime It also depends on whether they are fortunate ISA, but it is more flexible than the Help to Buy ISA. With the Lifetime ISA, you can invest as enough, even at such a young age, to hit the well as save, which is useful for those wanting annual allowance each year for tax relief on to take on more risk. pension savings (£40,000 for most people

That said, if there is a strong chance you will need to raid your savings early, you would be better off considering the Help to Buy ISA. With this option, you lose the government bonus if you do not use the money to buy your first home, but there is no other penalty. If you withdraw savings from a Lifetime ISA before you hit 60 for a purpose other than buying your first home, you will forfeit your government bonus and any growth on that bonus, as well as receiving a five per cent penalty. While this explains the differences between the Help to Buy ISA and the Lifetime ISA, it’s important to remember that the best option for you depends on your individual circumstances, needs and objectives. If you’re interested in opening an ISA or reviewing your options, please speak to your financial planner.

Financial guidance Making the complex Simple.

Close Brothers has been inspiring people to make a positive change to their financial future for over 45 years. Our skills and expertise help to make complicated subjects like tax planning, mortgages, pensions, retirement and estate planning easy to understand. We are proud to be selected as the preferred Financial Planning partner for IPSE members.

For more information about our programme of dedicated seminars, webinars and online financial education portal, visit: membership@ipse.co.uk

0808 278 4083

www.ipse.co.uk/closebrothers

Telephone calls made to any member of Close Brothers Asset Management may be recorded, Close Brothers Asset Management is a trading name of Close Asset Management Limited (Registered number: 01644127). Close Brothers Group plc, registered in England and Wales and authorised and regulated by the Financial Conduct Authority. Registered office: 10 Crown Place, London EC2A 4FT. © Copyright Close Asset Management Limited 2017. CBAM4576 Oct 17

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INSURANCE

Content provided by

AXA

THE HIDDEN BARRIERS TO STARTING A BUSINESS

s an unprecedented number of people start their own businesses in the UK, a study by AXA Direct has uncovered the hidden emotional costs of going it alone. Crises in confidence, imposter syndrome and loneliness are common rites of passage for those who choose self-employment. And contrary to the entrepreneur stereotype of reality TV, self-promotion doesn’t come naturally to most people; it is actually the business skill they struggle with most. 67 per cent of business owners said they have suffered from imposter syndrome – an irrational fear of being exposed as a fraud that was first studied by psychologists Clance and Imes back in 1978. For 44 per cent of those surveyed, this self-doubt is intense enough to be named a ‘daily companion’. According to the study, women are more likely to admit to suffering from imposter syndrome, with 74 per cent saying they experienced it compared to 58 per cent of men. The majority of freelance professionals also said they experienced this regularly (71%), compared to just under half of those running construction firms and 60 per cent of those in retail.

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Social isolation is similarly high among people who go selfemployed: half of those surveyed said working for themselves had led to loneliness. However, there is little correlation between business owners’ levels of loneliness and the amount of time they actually spend alone. Rather, the most common reason for loneliness was having people around,like friends and family, but not being able to discuss work with them as they had with colleagues and bosses. This emotional adjustment proves almost as difficult as the financial for people starting a business. While 46 per cent of business owners said funding had been their main obstacle in the early days, an almost equal number, 41 per cent, named psychological barriers top instead. In contrast to the hyper-confident entrepreneurs portrayed on reality TV shows, few people in business today are natural or enthusiastic self-promoters. When asked to name the skill they most struggle with, six in ten placed ‘projecting myself confidently’ top. For comparison, the second and third most popular answers were financial management (named by just 21%) and IT/digital skills (23%).

“We live in an inspiring time: more than two million British people have launched a business in the past three years, and we estimate that another 3.5 million people are at the planning stage. They are becoming self-employed in the pursuit of a better life, but it can often be an emotional rollercoaster, especially in the early days. Long hours, adjusting to life without the support of colleagues and employers, as well as needing to prove yourself to clients can all take their toll. That’s why having an action plan for emotional low points is just as important as having a good financial plan.” Gareth Howell, managing director, AXA Direct

TOP TIPS FOR ADJUSTING TO SELF-EMPLOYED LIFE The three main pieces of advice from business owners to anyone starting up are: 1. Make breaks as high a priority as meetings. Working from home? Try to discipline yourself to take time out. Go for a 30 minute walk in the morning, take meal breaks religiously and avoid working past 6pm – unless there is a real need to. 2. Create your own entrepreneurial community. Join a web community. These groups can often be the place to go if you want advice about your business and can also offer you reassurance and time. 3. Remember you started a business because you’re good at something. Whether you are a college drop-out or a successful academic, your past does not matter. You made a decision to start something because you had something to offer and most importantly, you are good at.

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I N T E R V I E W

KAT Y C ARLISLE

With a freelance career comes the sole responsibility of managing and maintaining your own finances. Sometimes it can help learning from someone who has been there and done it before. IPSE’s Tom Hayward spoke with website designer Katy Carlisle who shares all the financial advice she has learnt since embarking on her freelance journey four years ago.

What were the first steps you took when planning your finances?

of “what do I need to earn to cover the bills, and how do I go about doing it”?

Have any particular apps/software helped you manage your finances?

There wasn’t much financial planning at the beginning. I never had targets for what I wanted to earn each month; it was just a case

Starting out I didn’t have a portfolio so I charged a low fee to get some work, add to my portfolio, and build the business.

Being a digital person I didn’t want to do invoices or anything on paper, so I use a piece of accounting software called Wave, and

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popular apps like Xero and Freshbooks, which were still in their infancy then. It’s free, you can send customised invoices and you can pay online with a credit or debit card – that really speeds up how quickly clients paid me. It’s very convenient. I also use gosimpletax.com for my tax returns. It asks you for all the same information HMRC does, but in a human language. It adds in helpful suggestions so that you claim for everything you are allowed to claim for. If you put in a car-related expense, for example, it would ask if you need to claim for road tax. You pay a nominal fee and it is completely legitimised by HMRC. Where else do you go for financial advice?

financially. September and January are very busy, so I try to make sure before mid-June I have invoiced as much as I possibly can to tide me over until September.

It’s a slow but sustainable growth rather than bringing in a tonne of money overnight.

If you’re starting out, talk to someone in your industry and find out their quiet times - then prepare accordingly. A lot of the time you can intuitively work out when it’s likely to be busy; people working in weddings will be busy in summer, personal trainers will be busy in January etc. Invoice at busy periods to tide you over through quiet months.

I have spent time reading test cases between HMRC and self-employed people, which explain certain rulings. I like If you were starting out again, understanding the intricacies what would you do differently? of it, though I understand I’d definitely that’s not the case for I would set myself targets in the advise getting most people. So if you first three to six months. That aren’t as much of a an accountant way, rather than being reactive geek, I’d definitely advise - they pay for - which I was financially - I would getting an accountant like to be more proactive. Rather themselves. they pay for themselves. than looking at my outgoings over With self-employed income being volatile and fluctuating, how do you budget over a long-period? I’ve learnt to recognise the patterns and I know that, for me, summer is very quiet

people I need to get on my training workshops, how many signed up to my membership services, how many members I need in my Freelance Folk community group etc. Then I have a few different ways of reaching my target.

a year; I was just looking at how I was going to pay the bills each month. Now I’d look at outgoings over a year, then work backwards to see what I need to do to get to, or beyond, that point. That’s breaking down how many clients I need, how many

What is the one piece of financial advice you would give someone starting out? If you don’t know what you’re doing, get help! You will probably know if you’re someone who delights in working out targets, numbers, spreadsheets and finances. If you’re not that person, then find someone to help who is. I want to stress that making lots of money isn’t the most important thing for me. If you’re a lifestyle freelancer, then you haven’t gone into this to make millions. There are so many people out there going on about “how I made a six-figure sum overnight using this framework.” But for a lot of us, we are making enough to get by and it’s a slow but sustainable growth rather than bringing in a tonne of money overnight. I still don’t make loads of money, but I have a better life as a freelancer.

The Wheel Exists Katy Carlisle helps people to create lovely websites in the Squarespace platform through her business, The Wheel Exists. She also founded the Freelance Folk co-working group. Earlier this year she was named IPSE’s inaugural Ambassador of the Year for all the work she has done for the freelance community in Manchester. www.thewheelexists.com

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ASSET MANAGEMENT

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C LO S E B R OT H E R S

The perfect

sandwich

IPSE my money Magazine

Age S p ace ’s An n abel Ja m e s r un s t h ro u g h the to p t ips to he l p ‘g ene ra t i o n sa nd w ic h ’ p re p a re f or l ater l i f e .

n recent years, the humble sandwich has come to stand not just for a delicious lunchtime snack, but for an entire generation of people: the so-called ‘sandwich generation’. That’s because a growing number of 40-60-year-olds have found themselves sandwiched between the competing demands of caring both for their children and for their elderly relatives. It’s really no surprise that this group has emerged: in the UK we have not just extended life, but there is also growing economic pressure on young adults, meaning more and more have to either live at home or rely increasingly on the bank of mum and dad. All exacerbated by a National Health Service that’s unable to cope and a social care system that’s yet to catch up. Of course, it isn’t all negative. Making a sandwich may be about squeezing the filling, but it’s also about binding everything together. And although this situation has brought many challenges, it has also bound the different generations of UK families closer together than they have been for a long time. We can’t ignore the negatives though. Many of us will soon find ourselves in the ‘sandwich generation’, and there are things we can all do to prepare ourselves and our families. To that end, members of Age Space, (the online community for people supporting elderly parents or relatives),

have offered their top tips to help you navigate your way through this potentially tricky stage of life. Many of us don’t talk about the issues surrounding later life with our families – we avoid the subject where we can. The result is that many things go unspoken and unplanned, which creates even more stress and confusion when a crisis occurs. So our first tip is to talk sooner and more openly about plans and expectations for the future with parents and adult children. Put together financial and legal plans; think about how and where you would like to live in later life; and let everyone know what (and where) the plans are so there are as few surprises as possible when they need to be implemented. There are a few key questions to ask when putting a plan together: 1. Have you established powers of attorney? Everyone should have power of attorney at the stage of life when they have responsibilities. So, when you talk to your parents about establishing power of attorney for them, why not consider making arrangements for yourself? 2. Have considered an advanced healthcare directive or ‘living will’? For medical matters, it can be extremely useful to have your wishes made clear in advance. With an advanced healthcare directive or ‘living will’, you can make clear what medical choices you want made in advance – in case you’re not able to make them yourself. 3. Have you sorted your will? Have you written your will? You may not be able to take it with you, but that’s not a good reason to leave your family and HMRC to sort your affairs out after you’ve gone.

4. Have you considered the “what if” scenarios? While everyone arrives at later life in their own way, there are some fundamental conversations you should have ahead of time: what type of care do you want, where do you want it, and how is it going to be funded? It’s also particularly important to work out the logistics of later life within families, so you can decide who does what. If there are siblings involved, or other family members, organising between yourselves can share the weight of responsibility – particularly in a crisis. Beyond planning and administration, Age Space members have also spoken about celebrating the advent of the sandwich generation. After all, it’s the result of strides in medical and social care giving people longer and healthier lives – and also of more women working and having children later. Each generation contributes to the sandwich – from the basics, such as grandparents doing the babysitting to teenage grandchildren offering tech support – to the fundamentals of life experiences and knowledge. Challenging maybe, but worth savouring.

Annabel James

Co-founder of agespace.org

agespace.org is the online community for anyone anxious about or caring for an elderly parent or relative. A friendly and frank conversation space at its heart, Age Space also provides advice and guidance on everything to do with elderly care. Age Space was founded by Annabel James and Ruth Darrah in 2015. IPSE my money Magazine

QU I Z

What kind of saver are you? 28

IPSE my money Magazine

our relationship with money is linked to your past experiences, and even your childhood. Identifying your money persona can help you to understand your behaviours and beliefs, and your strengths and weaknesses. This can improve your relationship with your finances.

A friend of a friend is raising money to launch their new business venture, and they ask you to contribute an amount of your choice. Would you help out? A You’ll have a look into it. You might donate a bit, as long as it feels right. B You love being able to do things like this, so you’d get your wallet out straight away. And spread the word to everyone else. C You probably won’t. There are more sensible things you could invest that money in. D No way. You stay well away from those things - it’s all a scam.

Your best friend comes to you in desperate need because they’ve overspent, and need to borrow some money to tide them over. Do you help them out? A You’d try to help out as much as you could; you’d feel guilty if you didn’t. B Why not? That’s what friends are for. You’re glad your friends see you as someone they can depend on. C Sure - if a close friend is genuinely in trouble, you’re more than ready to give them what they need (including a nice long “I told you so” speech, free of charge). D To be completely honest, you’d rather not get involved unless it’s absolutely necessary. Money is a well-known cause of damage to friendships and other relationships.

What do you think of outrageously wealthy people who flaunt their possessions on social media? A It must be nice to be so fortunate, but you don’t think too much about it. There’s no point obsessing over what you can’t have. B Honestly? You are kind of impressed, and sometimes even slightly envious of people who can

be that free with money. Especially if they look like they’re having a lot of fun. C They are very clearly over-compensating for something that they lack. You pity them, in a way. D The mere thought of people like that makes you slightly uncomfortable. If you behaved like that you’d be terrified of the repercussions. Would you say you generally feel in control of your finances? A Ha ha, no way. B It depends on what’s going on. Sometimes you’re in control, but you do get drawn into frivolous things sometimes. C Yes, very in control. You pride yourself on it, actually. D You try to be in control but you believe you can never be too careful, so you try to stay vigilant at all times.

Would you choose a boring job that was well paid, or an exciting job that was underpaid? A You’d go for the exciting job, and worry about the problems later. B You’d take the boring job. If anyone made fun of you for it, you’d silence them with your ginormous pay check. C You’d take the boring job; it may not be fun but at least you’d feel financially secure. D You’d be tempted to take the exciting job, but you’d be too scared of the consequences. You wouldn’t even enjoy the job if you were constantly anxious about it, anyway.

What are your thoughts on new financial technology & banking apps? A You don’t pay much attention; it doesn’t really concern you. B It’s quite a trendy industry, you’re happy to hear about it if it’s something cool and interesting. C You love to be in the know about things like that, especially if they’re useful when it comes to saving money. D You’re slightly distrustful of them. You’d rather stick to traditional methods of managing your money.

What are your thoughts on money as a status symbol? A You don’t really like the thought of that. There’s more to a person than the contents of their bank account. B Money talks. It’s a symbol of status and success, whether people like to admit it or not. C Flashing a load of cash around can look desperate. Having money saved away and not bragging about it is far more impressive. D You’re quite wary of that concept. Pride comes before a fall, after all.

How often do you spend money purely on yourself as treat? A Only if you can really convince yourself you deserve a treat. B Seems a bit pointless. Treating someone else would be more enjoyable. C Doesn’t really appeal to you; you’d only feel guilty about wasting the money. Knowing that you have the money saved feels better than a temporary treat, anyway. D You don’t mind doing that occasionally, as long as it’s genuinely your own decision and not someone else’s.

Some of your friends insist on going to very expensive places, and spending time with them is starting to stretch your budget. How do you react? A You just go along with it. You often get strong-armed into things that you later regret, unfortunately. B Bring it on - if your friends want to test out your spending abilities, you’re more than happy to rise to the challenge. C You won’t be pressured into anything if you don’t want to - you’re more than happy to stand your ground with this. D Sounds horrific - any decent friend wouldn’t want to make you uncomfortable, especially where money’s concerned.

What are your views on discussing money? A You’d much rather talk about something else. (Pretty much anything else). B It can feel pretty good to talk about your latest purchases, especially when you get to show off a little bit. C You’re happy to offer advice on saving techniques. In fact, you can get quite passionate - so many people are too careless with money, it’s frustrating to see them making bad decisions. D It’s not always the most pleasant topic but it’s good to stay in the loop - especially when there are so many things that could go wrong.

Which of these statements do you agree with the most? A Some people are naturally gifted with managing their finances. I’m just not one of those people. B Life is short, you might as well enjoy yourself as much as you can, while you can. C Be intelligent about finance. Don’t spend recklessly just for the sake of appearances, keep something for a rainy day D The powers that be would happily drain us all for every penny, if we aren’t careful. Stay vigilant!

SCORES OVERLEAF IPSE my money Magazine

Mostly

A’s B’s C’s D’s You tend to avoid money

You like to flaunt money

You like to stash money away

You are slightly fearful about money

You tend to avoid dealing with your finances, hence sabotaging yourself. Maybe you feel guilty about money, or aren’t confident in your abilities to handle it properly.

Is your self-worth rooted in the material possessions you have? Maybe you have a strong desire to impress others.

You’re known for your great saving habits, and like to feel completely safe before spending. Maybe you believe you’ll never have enough to be truly comfortable. You may have experienced not having much in the past, and don’t want to go through the same thing again.

Your relationship with money is based in fear. It’s good to be vigilant, but by being too vigilant you may actually be harming your finances.

Money doesn’t have to be intimidating - face your fears, it’s better in the long run. Take it step by step. Start by setting yourself small budgeting challenges to develop confidence in your own abilities There’s no reason you can’t be just as finance savvy as other people.

Try to stick to a budgeting system to keep better control over your finances. Invest in things that are important to you, rather than prioritising what other people might think. It may also be worthwhile spending time with people whose company you genuinely enjoy with or without money, and realise you can have a lot of fun without spending very much.

You are very good at saving and budgeting, so balance that out with investing in yourself. Why not have professional portfolio photos taken of yourself, or update your skills?

Being cautious isn’t a bad thing but you might actually be missing out on opportunities to grow your money. Look into investment products, or try talking to a financial adviser.

* THIS IS JUST A ROUGH GUIDE – MANY PEOPLE FIT INTO MORE THAN JUST ONE PERSONA.

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