What do you do if your income as a self-employed investment banker is inconsistent?

1 Track your income and expenses

The first step to managing your income as a self-employed investment banker is to track it accurately and regularly. You need to know how much money you are making and spending each month, as well as the sources and timing of your income. This will help you identify your average income, your peak and low seasons, and your fixed and variable expenses. You can use accounting software, spreadsheets, or apps to record and categorize your income and expenses.

3 Save for taxes and retirement

As a self-employed investment banker, you are responsible for paying your own taxes and saving for your retirement. You should set aside a percentage of your income every month for these purposes, and avoid using it for anything else. You can use online calculators or consult a tax professional to estimate how much you owe in taxes each year, and pay them quarterly to avoid penalties and interest. You can also use various retirement plans, such as SEP-IRA, Solo 401(k), or Roth IRA, to save for your future and reduce your taxable income.

4 Diversify your income streams

Another way to cope with inconsistent income is to diversify your income streams. You can do this by offering different services, such as advisory, valuation, or due diligence, to different clients, industries, or markets. You can also create passive income sources, such as online courses, books, or podcasts, that generate revenue without requiring much time or effort. By diversifying your income streams, you can reduce your dependence on any single client or project, and increase your stability and security.

5 Manage your cash flow

Managing your cash flow is crucial for your financial health as a self-employed investment banker. You need to ensure that you have enough money to cover your expenses and obligations, while also investing in your growth and development. You can improve your cash flow by invoicing your clients promptly and accurately, following up on late payments, negotiating favorable terms and fees, and reducing unnecessary costs. You can also use tools such as credit cards, loans, or lines of credit, to bridge any gaps in your cash flow, but be careful not to overextend yourself.

6 Seek professional advice

Finally, you can benefit from seeking professional advice from experts who understand the challenges and opportunities of self-employment. You can hire an accountant, a financial planner, a lawyer, or a coach, to help you with various aspects of your business and personal finances, such as tax planning, budgeting, legal compliance, or goal setting. You can also network with other self-employed investment bankers, or join online communities, to share your experiences, insights, and tips. By seeking professional advice, you can learn from others, avoid common mistakes, and find solutions to your problems.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?