For many self-employed people, holidays are a complete fantasy.
Permanent staff have the luxury of taking a holiday (or being sick) knowing they’re still getting a paycheck at the end of the week. Some employers even force them to take a holiday to use up any annual leave surpluses!
Self-employed people, on the other hand, have to relentlessly plan and save to orchestrate their holidays.
This article will guide you through my planning process for turning those holiday fantasies into realities.
The dreaded wedding invitation
How do you feel when you receive an invitation to an overseas wedding?
Is it dread? Joy?
Perhaps you feel happy because your best mate has found lasting love, but nauseated thinking about how you are going to take a week off work to fly to their wedding. And of course, you HAVE to go - after all, they took a week off to attend yours.
The feelings self-employed people feel in these situations come from several places:
- Worry about going a week with no income coming in
- Concern about finding cover for your current work project
- Wondering how one can actually relax and take a break
Many people go into business for themselves so that they can be in charge of their own work hours, be their own boss and have control over where they work. But the reality is that once you are fully in business for yourself, it’s sometimes easier said than done. While you may be good at building a business and structuring your own time, if you fail to also structure in holiday time then your work-life balance will really suffer.
Losing income is probably the biggest barrier to taking time away from work. Most of the self-employed people I know earn a good rate, but only when they are working. If they take time off, the income tap is also turned off. Or they may only manage to pay themselves a greatly reduced amount while they are away - and therefore are deterred from taking the time off for themselves.
As with many things, a little forward planning can give you the freedom to plan time off and get paid while you are doing it.
Don’t wait for the wheels to fall off
Self-employed people can sometimes get tunnel vision when it comes to their career or business. The drive I see in some of my peers is inspiring. But, when that drive takes control and digs into their social or family life, I find it really concerning.
As humans, we can only maintain frantic momentum for so long. Eventually, your energy will dissipate and you will have to recharge your batteries.
The problem is, we often don’t realise our batteries are drained until the motor stops running. So even in the earliest days of working for yourself, you should be thinking about planning future time off.
Don’t wait for the wheels to fall off - get a plan in place now.
Planning a plan
Before you can get a plan in place, you need to prepare. Here are the things you should be thinking about.
1. Get buy-in from your partner or family
If you have a partner or a family, it’s essential you get them on board with planning your downtime. Fortunately, these discussions can be great for team bonding.
What family events (weddings, group getaways) are planned for the following year? What do you want to achieve with a holiday? Do you want to escape from the city, or get some time at home to do some DIY?
2. Pencil in some ideas on a calendar
It really helps to get some marks made in next year’s calendar - preferably a calendar that fits onto a single page. This really helps you visualise the ebb and flow of that year’s events before making any commitments. At this stage, you should have in mind if you want to spread your holiday out throughout the year or take it all at once (or somewhere in between!).
3. Consider your work commitments and schedule
Then think about your work schedule. When is your quiet time? If you have one, that’s obviously the time that you want to schedule your holiday break - if possible. If you don’t have one, then the best you can do is look to avoid your busiest times of the year.
Regardless, the best time of your work calendar may not coincide with your ideal holiday plans, so you are going to need to compromise with what your business needs and what your friends and family need, but that is why you need to sit down and plan it out well in advance so that you can meet everyone’s expectations as best you can.
If you write it down it’s more likely to happen
When it comes to work, we are programmed to plan relentlessly. This can be taken to extremes; I know some people who plan their work years in advance!
So why not apply this madness to your personal life?
I suggest starting small to help me prove this point. Put some lunch dates in your calendar for next week (or your next earliest available lunch opening!) and watch what happens. Because it’s in your calendar, you’ll automatically start to structure your working week around them.
This is my point – unless you actually create a calendar event, it’s just not going to happen.
Now let’s turn back to the bigger holiday picture.
If you just….BOOK a holiday - Flights, hotels, etc - then those details will, through the miracle of technology, automatically be added to your calendar! And once that holiday is in your calendar, you’ll automatically start planning your workload and life around those dates.
Next - notify your clients!
This is important.
If you have clients or regular customers, you MUST help them understand that you will be unavailable on these dates.
My husband, a freelance graphic designer, does this incredibly well. His quiet time is around Christmas because a lot of his clients are on leave themselves. In the months leading up to December and January, he asks them what their work schedule is looking like during that time and lets them know exactly when he will be on leave himself.
He also sets clear expectations. He tells them that:
- He will be taking a break from work and won’t be available
- He gives his specific leave dates… My last day of work is X. I will return to work on Y.
- He asks them to plan accordingly in the leadup so he can complete any high-priority work prior to his leaving
- For some clients he tells them he will be checking his emails once a day at a specific time and if there is anything very urgent he will act on it. As a self-employed person, you sometimes have to do this to maintain communication with key customers. If you **can **avoid doing this, great!
Because he sets the scene so well it is rare for his clients to need him while he is away. Your clients, too, will understand that you need to take a break and if you keep them fully involved in timeframes, they will adjust their own work diary to accommodate yours.
The important bit: getting paid when you are on holiday
It’s all very well taking time off, but how on earth do you continue to pay yourself while you are gone? Concerns about income is a huge factor that stops many self-employed people from taking a break.
But if you’re proactive you can easily plan for this.
This is where planning ahead for your holidays really pays off. Once you have it in the calendar, set up a “Travel” savings account and, in the 6-12 months leading up to that holiday, you automatically pay into that savings account.
This is basically what employers already do for their permanent staff.
You can use that money to replace the income you lost, or simply to pay for the holiday. Even better, you can keep this savings account going all the time, even when you don’t have any holidays planned. Then, when time off is required, you can simply draw down on this money and your “paycheque” can continue on uninterrupted.
Budgeting for annual and sick leave
Let’s say that in total you will give yourself four weeks of annual leave a year.
For those of you who use the Hnry service, you can set up an allocation to automatically deduct a percentage of your income every time you get paid into your Hnry Account. As a rough percentage, you would simply take 4 weeks and divide it by 52 weeks, which is about 7.7%. Setting aside 7.7% from each pay into an ‘Annual Leave’ savings account would give you a solid buffer to take leave and be able to replace your income.
If you don’t work on percentages, then you’ll need to take a fixed payment approach. First, work out what you pay yourself each week. Chances are that as a self-employed person this income is variable; if that’s the case, work out the average weekly pay you have been receiving. Let’s say your average income over four weeks is $4,000. That’s the income you need to replace for your annual leave.
You can then work out the fixed amounts for how much you need to save every week. Divide $4,000 by 52 weeks in the year, which gives you the amount of $76.92 per week. Create a weekly automatic transfer of that small amount into your ‘Annual Leave’ bank account. And now just sit back and watch it grow, knowing that 12 months from now you can begin to take your annual leave, much like you would if you were an employee.
You can use similar formulas to set money aside for sick leave as well.
This simple structure is called a sinking fund and they are an excellent way to save up in advance for costs that you know are coming up. It eliminates the budget strain you can feel at the time of a financial event.
Remember, you are your business’s biggest asset. If you worked as an owner-operator of a truck, delivering important goods up and down the country, then you would take a lot of care to keep that machine running in top condition 100% of the time. You would spend a lot of time and money conducting regular maintenance on your key asset, your truck.
As a self-employed person, YOU are your business’s key asset. So make sure that you are setting money aside to maintain your own health and wellbeing.
Sit back and relax
Congratulations! You’ve got a plan in place:
- The ‘annual leave’ bank account is growing ✅
- Annual leave dates are booked into your calendar well in advance ✅
- Clients are fully aware of your annual leave dates ✅
- The family are looking forward to the holidays you have planned ✅
When you reach that 12-month point you know that you now have that cash cushion in your business, enough money built up to safely take a holiday and your paycheque does not change. Plus you know that this fund will continue to replenish itself over time.
That should give you a huge sense of security. It also should really help with the financial planning you do in your personal life as well. You know that you still have income coming in to cover all of your expenses at home and you know that you are now living a more balanced life.
So sit back, relax, and be at peace.