6 Myths about the financial conditions of self-employed people
It is usually considered suitable for people to be self-employed through a self-owned business or any freelance work. There is no boss to tame them or drive them according to their wish, and they are financially free people. However, there is also a bitter truth about the financial life of the self-employed.
Here are the 5 myths about the financial condition of the self-employed people. Read them carefully if you are your boss because the wrong information is like a slow poison that prevents progress.
1. Self-employed people are financially insecure due to volatile income
It is a fact that a self-employed person does not earn the same amount every month. The ups and downs are in the essential nature of their income. The margins of profit and loss and the frequency of getting projects keep changing. But that does not mean that a self-employed is not secure in his/her finances. Until the loss in work is not significant, there are only some little changes in the income, and they are manageable.
2. All self-employed people are rich and can spend a lot of money
Just as people think that self-employed people are always financially insecure equal amount of people believe vice-versa. They think that the people who own their business are ALWAYS rich and can spend a lot of money.
In reality, the life of a self-reliant person is not easy always. Yes, there is no fear of deduction from the employer, but not all days are the same. There are vicissitudes in work, and they may cause degrade in the monthly income.
3. Self-employed people cannot qualify for a loan
If you take this seriously, then you need to change the perception. It is wrong that a self-employed person cannot get a loan. The finance industry is much more advanced now and works on the simple logic of repaying capacity.
No employment status or credit score status can stop from attaining funds if the financial efficiency is energetic. Yes, this does not mean that you develop overconfidence to believe in the exaggerated things like kredit für selbstständige ohne einkommensnachweis. It is unrealistic; you need to provide absolute proof of income.
4. A self employed always gets the desired payment
It is again not true, because in every industry there is a minimum and maximum rate fixed for every work. One cannot go beyond that; otherwise, the person will get no clients. Besides this, the market conditions also vary month by month, year by year.
A salaried person gets the same amount of income every month, but if the market is down, a self-employed get less work and money. There is always a kind of uncertainty because the self-reliant people depend a lot on the market conditions. They cannot change their destiny.
5. Financial progress of self-employed is easier than the employed
No, it is not valid. An employed person is not only safe with a regular income but also with appropriate incentives. If an employed person is giving an excellent performance, he/she gets financial rewards at the decided time. At least the monthly income is fixed.
On the other hand, in self-employment, a person first needs to make clients and earn the confidence to get new projects. There is no surety of getting a decided amount every month. In case of any degrade in performance, the client can reject the contract.
6. Taking a leave from work cause no financial loss
This myth is again a hurdle that can make you feel bad about your own life as a self-employed. If you are in the job, you can take a day off from work, and there are decided the number of days for you. But for a person running his/her business, it may not be accessible if there is a deadline for delivery.
You cannot leave a project pending and take leave if the same day is due to send the project or make the delivery. If you do that, the client may get angry, and you may have a significant financial loss.
Excess of everything is terrible!! The financial life of a self-employed is neither too luxurious nor too tricky on the financial part. It is wrong if you think that a self-employed person can get loans without schufa and proof of income, as it is impossible. At the same time, it is not true that all in self-employment are rich. A coin always has two sides, and you should know both the sides otherwise misconceptions happen. Stay informed as life works on logic and not a myth.