Confident-Pose“If you’re among the 10.6 million Americans who are self-employed, you know that being your own boss brings some serious rewards,” writes Dara Luber in a first-rate piece for “Steering your own vessel gives you a freedom and control that just can’t be found in traditional employment. But there are also some unique challenges associated with working for yourself. That’s particularly true when it comes to personal finances.” She continues:

“While traditional employees have steady salaries and corporate-backed benefits, 63% of respondents in a recent self-employment survey from TD Ameritrade said they don’t have access to things like paid vacation, better health care packages and professional support. That complicates things when it comes to financial goals both large and small.

“Over half (55%) of those surveyed said they’re behind in saving for retirement, and 48% said the inability to predict income is a problem. The good news is that these hurdles don’t mean self-employment is a bad choice or that it spells doom for personal financial plans. It just means you need to look at your goals a little differently.”

Here are two of the four tips for the self-employed outlined in Luber’s article:

  1. Separate the business from the personal.

“This is a tough one for many small-business owners and self-employed individuals. When you feel like the business is an extension of yourself, it’s difficult to divide the two, but it’s essential to do just that. Many entrepreneurs and financial professionals say business goals should be set apart from personal goals, and the financial aspect of both should be separate. Consider these steps to establish separate plans:

  • Determine the legal structure the business will take
  • Determine financing for the business
  • Understand the difference between personal assets and company expenses
  • Pay yourself a set salary

“The bottom line is to keep a firm division between personal and business.

  1. Be realistic.

“Business owners tend to be an optimistic group. Sometimes that enables you to take risks that could pay off in a big way, but it’s also something to be aware of as you set personal goals. Don’t let a false sense of security keep you from acting. Saving for retirement, whether it’s through an IRA or a small-business retirement plan, for example, doesn’t come together on its own. It takes deliberate planning. Even small savings can help you work toward a larger goal like retirement, but it’s important to take those steps and set milestones. People who save regularly (even if it’s not a huge amount) are more likely to arrive in retirement prepared.

“You should also think realistically about your time and take a moment to consider what type of retirement plan is best for you. If you’re busy running your business, you may not have time to monitor a retirement account, for instance. A managed portfolio can help with personal investments while you concentrate on growing the business.”