No idea how to manage money

[HornungTheHelpful]

I am lucky in that I am a high earner (sole trader barrister). However, I have a number of problems managing money. Many of these stem from the fact that I am self-employed. I am not paid regularly, and sometimes payments can be extremely irregular. Despite the fact that I theoretically have enough money to pay everything, I often have cashflow problems and end up using borrowing and/or credit cards.

I have tried hard for years to ensure payments are more regular and this is about as good as it gets. So what do I do? I'm bogged down in debt, that worsens the cashflow position, and struggle from month to month, rarely have savings, don't make pension provision as regularly as I should and while annually there should be a surplus I never seem to see it. I don't know what I'm doing wrong or how to fix it.

I've looked to find professional help, but there only seems to be people who want to help me get an IVA or people who want to invest for me, and I need something in the middle. I am cable of doing basic financial management, can read accounts and manage my tax affairs (except when the cash flow becomes problematic).

Any suggestions? Either for apps or techniques to help me, or the type of professional help that might work for me. Thank you.

I'm self employed with fluctuations although not as big as yours.

Definitely have a "business" account and a home account. First use YNAB to build a personal buffer and work on building a business buffer as well.

Good luck

I used to be a barristers clerk and we had a lot of barristers who struggled with this. Things that worked for some who I helped were:

Paying all income into a business account and then paying a regular "salary" amount to their personal account each month.

Scooping of x percent (20% for tax plus percentage for chambers fees) into a savings account on EVERY income transaction so that on balance there was usual enough in savings for tax bills and chambers expenses etc.

What line of practice are you in. Are you on legal aid family/crime or are you privately paying clients in civil/ancil etc. How fees are chased by your clerks will be relevant here.

Your clerks should be on the chasing btw! I used to have a reputation for getting old debt in and rarely had to write anything off 🤣

You need to start at the simple point that you are spending more than you earning. You need to cut back your spending so you don’t get into more debt. You then need a plan to manage your money including how to pay off your debt.

Wise Monkey financial coaching. Simone is very good, and will help you work it all out.

I use YNAB too. I'm not self employed but Nick True on YouTube has videos explaining how to use it when you're self-employed or running a business with irregular income. Well worth a watch.

Not so. The OP's 09:32 update clarifies that last year at least her income exceeded her outgoings. It really is a timing issue. Imo the priority should be figuring out how to get rid of the debt so you are in a position that when you receive a lump sum that is funding you for the next few months rather than the last few.

You need to work out how much you need to live on pcm. Then every month you earn more than that you put into an account that you use for your basic expenses in the months you get paid less.

For big one off expenses wait until you have evened out over a year.

OP I’m sure a bookkeeper could manage this for you if you (or your dad) really can’t do it yourself.

My DH is self employed and I manage his books, although he has a company, but I feel the concept is the same. I pay him a small monthly salary that we can just about live on and any extra at the end of the year I pay as a dividend. This helps a lot with cash flow.