How to safeguard your financial future as a self-employed beauty professional

Protect your income, build financial resilience, and plan for the unexpected with these expert tips.

As a self-employed beauty professional, your income isn’t just your livelihood – it’s the backbone of your business. Unlike traditional employees, you don’t have access to sick pay or other benefits, so safeguarding your financial future requires proactive planning.

Income protection insurance is a vital tool in your financial toolkit, offering financial support when illness or injury prevents you from working.

What is income protection insurance?

Income protection insurance helps bridge the gap when you're unable to work due to illness or injury. It provides a regular income to cover essential expenses such as:

• Mortgage or rent payments
• Utility bills
• Daily living costs
• Some policies also offer additional support, like access to virtual GP services.

Key features of income protection:

• Flexible claims: You can claim multiple times within the policy’s duration.
• Waiting periods: Payments begin after a pre-agreed waiting period, typically ranging from 4 to 52 weeks.
• Tailored options: Choose coverage that aligns with your unique needs.

Income protection in numbers

Statistics from the Association of British Insurers (ABI) highlight the importance of income protection:

• Over 15,900 claims were made on individual income protection policies in 2022.
• Musculoskeletal issues, such as back and neck pain, accounted for 34% of claims.
• 84.4% of claims were paid, with an average payout of £21,913.

These figures underscore the value of this insurance for self-employed professionals.

Building a financial safety net

While insurance is critical, having an emergency fund is equally important. Regularly saving a portion of your earnings can help you build a financial cushion to cover expenses during periods of reduced income or unexpected emergencies.

Pro tip: Aim to save three to six months’ worth of living expenses to create a robust financial buffer.

Diversify your income streams

Financial resilience isn’t just about saving – it’s also about earning. Diversifying your income streams can provide stability and safeguard against fluctuations in demand. Consider:

• Expanding your service menu
• Retailing products – find out how to set up an online salon shop here
• Offering online courses or virtual consultations

This approach not only boosts your revenue but also strengthens your business’s long-term stability.

Building long-term financial security

While income protection and emergency savings are essential, it's also important to think about your long-term financial future.

As a self-employed beauty professional, investing in a pension can be an effective way to secure your retirement years.

You can read more about why self-employed beauty pros should start investing in a pension here.

Consult financial experts 

Staying informed about financial planning and tax implications as a self-employed beauty professional is essential for protecting your income.

However, navigating self-employment finances can be complex. A financial adviser or accountant can help you:

• Optimise your business structure
• Maximise tax deductions
• Develop a long-term financial strategy

Seeking professional guidance ensures your business and personal finances are aligned with your goals.