• Keep your costs down
• Get your personal finances sorted
• Join Moneymakingmates.com

The main thing that puts people off becoming self-employed is the lack of security you get from losing a stable pay cheque. Cashflow problems can ruin a freelancer. On the other hand, taking control of your money early on, and staying in control of it, will keep you on track without the nuisance of a boss telling you what to do. When you are setting up as a freelancer, follow these suggestions from the start:

 
Cut down on all your costs
Everyone should do this anyway but when you are just starting out as a self-employed person you really need to reduce your outgoings as much as possible. You can save literally £100s in a year by switching your gas, electricity, internet, mobile, insurance, bank and more.

Start small and cheap
Don't go out and splurge on state-of-the-art IT equipment, designer suits, laser-printed stationery and a posh office. Keep your overheads to a minimum. Work from the kitchen table if necessary; use your old computer; make the most of your best clothes. Don't start spending until you absolutely have to or you're making so much cash you can afford to.

Set a budget for yourself
Work out your monthly expenses, including a little extra for clothes, going out, travel etc. You can use an online budget calculator, or just do it yourself with pen and paper. Simply write a list of all your monthly living expenses and then add them up. This will show you what you need to earn each month to keep going.

Get the right account
Don’t set up a business account if you can help it. Banks will charge you every time you breathe if you have one. Instead, just get a separate account for your business transactions. Or set an entirely different one up with another bank. That said; if you like the idea of a proper business account and you won’t be making that many transactions each year then open one with Alliance & Leicester. They offer a free business account to small businesses and even pay you a little interest if you are in credit. Also, Alliance & Leicester does an entirely free business account which has all you need for a small business.

Set up your own retirement fund
This is extremely important as many self-employed people are so busy paying for now that they forget about saving for the future. A study by the Economic and Social Research Council found that self-employed people tend to retire much later than employed people, usually because they enjoy their work more, but also because many can't afford to retire at the same time as everyone else. The best thing to do is set up a stakeholder pension, which are growing rapidly in popularity. You can put up to £2,700 per year into a stakeholder pension, even if you are earning very little. For more information on what they’re all about and how to get one, check out stakeholderpensions.gov.uk.

Get some good advice
Go to Moneymakingmates.com, our subscription-only sister site for people who are serious about setting up and running their own business. By being a member of Moneymakingmates you will get regular podcasts, reports, eBooks and articles on all aspects of business. You will also have access to the forum where businesspeople can swap ideas and questions.