Christmas is a time for fun and family but it is also a time of great expense. The cost of Christmas only seems to be increasing and unfortunately it can also be a lean time, especially if you are self-employed.
If you are self-employed you may have noticed that contracts tend to dry up over the Christmas period and some clients even stipulate in your contracts not to work over Christmas to reflect their closing period.
The nature of contracting is that you should always plan ahead when it comes to your finances. Ensure that you have savings in place for periods between contracts and be aware that financial preparation is particularly essential for self-employed people over the Christmas period.
Many typical contracts will end mid-December but even if you can secure contracts over the festive period or if you’re employed by an umbrella company and receive holiday pay, one pay check is unlikely to cover your Christmas spending.
The Christmas bank holidays themselves can also have an impact on the amount you can earn in December.
When self-employed and preparing for Christmas planning ahead is key. The problem is that Christmas also causing many contracts to be due for completion the week prior to Christmas, hence early December and autumn and notoriously busy periods.
Budgeting and planning
• Planning for Christmas when self-employed should include setting a clear budget. Don’t just guess but instead make a detailed list of all your essentials and a realistic list of all your Christmas extras. By making this list in early autumn you will know exactly how much money you would need to save should you fail to secure contracts throughout Christmas. If you do manage to secure contracts any extra finances will be a delightful bonus but plan for the worst. This will prevent overspending.
• Consider adjusting your normal spending habits in autumn to save up some extra cash for Christmas treats. Perhaps you could temporarily alter where you buy your food or choose cheaper brands to save up for Christmas in the event contracts dry up in December.
• By spacing out your Christmas shopping over several months you won’t be hit by such a major expense at once.
• Try to focus on preplanning and avoid the temptation to borrow money and work yourself into debt.
• If you have secured contracts over Christmas, make sure you make time for yourself and celebrations. Set clear boundaries.
• Don’t take it too easy over the whole of December. Work to make sure new contracts are already in place for January.
• Get all your financial admin sorted before the new year so you are ready for self-assessment at the end of January, check your tax code, make adjustments to your day rate for the coming year to match inflation and organise all receipts.