Freelancer, looking to automate/idiot proof my financial life.

lifeadmintrainee

Hello! Thanks to MSE Forumites' help, I've consolidated a bunch of credit card debt onto one interest-free card, which I'm now focused on paying off as promptly as humanly possible.

Meanwhile, I'd like to set up a massively idiot-proof means of running my financial life, so that I never find myself in anything close to the situation I landed in last time.

Basically: my work is a combination of freelance and (occasional) salaried income. 

What I would love beyond all measure is this: an automated system whereby when freelance payments come in, a percentage is immediately hived off to a savings account which I can barely access, and is only used for tax bills. 

Does such a thing exist? 

I ask because I have recently been gravely misled by ChatGPT (I know, I knowww), which confidently claimed that Monzo offered exactly this facility, then said I'd need to add If This Then That, then ultimately admitted it had made the whole thing up. Great.

Anyhow - is there any plausible means of doing what I seek, or will I need to rely on (gulp) willpower?

(Also, sidenote, if there are any glaring downsides in moving the majority of my banking activities from Lloyds to Monzo then please speak now!)

surreysaver

If you let something do things automatically, then how will you know what's going on and remain in control?
Personally, I wouldn't want my banking activities moved to a virtual bank, I would prefer to keep them with a traditional bricks and mortar bank that I could visit if I needed to 

fatbelly

You have a load of debt at 0% for a limited time. You need to focus on paying that to zero within that time.

Otherwise you will be paying 30% on the card while getting 4% on savings.

When you are debt-free then a regular savings account makes sense. Lloyds do one that gives 6.25%. I know you can do a bit better elsewhere but you currently have an account that gives you access to a saver and are thinking of ditching it.

Info on autosaving accounts here

https://www.moneysavingexpert.com/savings/auto-saving-apps/

Ordinary savings accounts

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

blue.peter

fatbelly said:

When you are debt-free then a regular savings account makes sense. Lloyds do one that gives 6.25%

Ideally, yes. But my understanding is that freelance payments are inherently irregular. Assuming that I'm right, that'd mean a mismatch between payments coming in and payments going out. It would certainly mean that manual management would still be needed. Mind you, I agree with @surreysaver: this is a good thing because it means remaining in control.

By the way, it's possible to do better than 6.25% on a regular saver. It's well worth keeping an eye on this page. There are currently open-to-all accounts available at 7.00% or even 8.00%.

@lifeadmintrainee : You might find this thread of interest. (Ignore the title - there's some good general advice, including a clear flow chart produced by someone who is, I think, in a similar position to you.)

LITRG

Hello. We are the Low Incomes Tax Reform Group (LITRG), part of the Chartered Institute of Taxation who are an educational charity. We are not part of HMRC or MSE. Although we can’t give individual advice, you might find our website information about budget payment plans useful: https://www.litrg.org.uk/news/spreading-your-tax-bill-budget-payment-plans. If you require further help, we recommend that you contact a tax adviser, HMRC or one of the tax charities where relevant. You can find more information about where to get help with tax here: https://www.litrg.org.uk/tax-nic/getting-help-tax. Thanks

LadyWithAPlan

I am a freelancer and ynab is amazing for getting in control of your money especially with a variable income..

simongregson

My advice would be to open a business account that allows you to set up 'pots' to put money into for your freelance work. Starling/monzo allow this. When you get a freelance payment, stick 30% of it into a tax pot and do not touch it - assuming you are a basic rate tax payer. It should roughly cover your tax bill.

Not touching it is going to be your responsibility however, you can't expect them to lock your own money away from yourself.

Then work out your remaining 0% credit card balance divided by how many months 0% is left, pay that first of all each month so it is paid down by the time the interest free period ends, assuming that leaves enough for your essential bills.

There are more efficient ways to organise your money in terms of earning interest, but doing it like this is the simplest way if you are struggling to avoid overspending.

NorwichMan

I currently have regular income as a sole trader as well as part time employment. For me, using envelope budgeting software with budgeting templates allows me to click a button each month to allocate the funds in my accounts into various categories, and this includes a percentage of non-employment income put aside for tax. I have been using Actual Budget for this since the spring and for me it works really well, I feel fully in control for minimal effort. It even syncs with 18 of my accounts using open banking (GoCardless) for free. Before that I was using YNAB4 for a few years and that was also good (but with that I was inputting all transactions manually, and the modern YNAB including sync is expensive in my opinion).