As we continue our October series on financial freedom through HR consultancy, we’re turning our attention to one of the trickiest parts of making the leap into consultancy – money.
For senior HR professionals, moving from a regular salary to self-employment can feel like stepping into unknown territory. It’s not just about how much you might earn, but how income works, what changes when you become your own boss, and how to feel secure and confident with your finances.
In this article, we’ll look at what happens when you swap salary for self-employed income, highlight the key differences you’ll notice, and share some practical tips for managing money as an HR consultant.
The shift from employee to business owner
When you’re employed, your salary is straightforward. It arrives each month, tax and National Insurance already deducted, with sick pay, holiday pay, and a pension scheme sitting behind it. You might not even notice the practicalities of money management day to day, because they’re taken care of for you.
As a consultant, things change. Your income will come directly from the clients you support, and you’ll need to set aside tax yourself, organise your pension, and think about insurance. That can feel daunting at first, but it’s also incredibly empowering. You’re in control – of what you earn, how you spend, and how you plan for the future. This change is one of the biggest adjustments when you begin managing money as an HR consultant.
What’s different about self-employed income?
Here are some of the key differences HR professionals usually notice when moving into consultancy:
- No automatic payslip – you invoice clients and receive payments directly.
- Variable monthly income – some months will be busier than others, particularly at the beginning.
- Responsibility for tax and National Insurance – you’ll need to plan for this and make payments directly to HMRC.
- Covering your own benefits – sick pay, holiday pay, pension contributions, and insurance all sit with you.
- Business expenses – you’ll have costs like professional memberships, software, insurance, and marketing, but many of these are tax-deductible.
Knowing these differences early on makes it easier to adjust expectations and build confidence in managing money as an HR consultant.
Building confidence with money management
Confidence with money doesn’t come overnight. It develops as you get more familiar with the flow of your consultancy work. These practical steps can help you build a strong foundation.
Separate your business and personal finances
Opening a business bank account is a simple but powerful move. Keeping your consultancy income and expenses separate from personal spending makes it far easier to see what’s happening financially, track invoices, and prepare for tax returns.
Understand your baseline costs
Work out how much you need each month to cover essentials like your mortgage or rent, bills, and living expenses. This “baseline” figure helps you plan how many clients or retained services you need to secure in order to feel comfortable.
Plan for tax from day one
A golden rule is to set aside a percentage of every invoice into a separate savings account for tax and National Insurance. Many consultants start with 25–30% as a rough guide. That way, when the tax bill arrives, you’ve already got the money waiting – one of the most important aspects of managing money as an HR consultant.
Create a safety buffer
Self-employment has ups and downs. Having a few months’ worth of essential costs set aside as a safety net helps you feel more secure and reduces pressure during quieter months.
Think about your pension early
It’s easy to focus on immediate income and forget about the long term. Speak to a financial adviser about the best way to continue pension contributions once you’re self-employed. Even small, regular payments add up.
Developing healthy financial habits as a consultant
Confidence with money isn’t just about what you earn, it’s also about how you manage it – and healthy habits are key when managing money as an HR consultant.
- Get comfortable with irregular payments – clients may pay at different times of the month, so plan your spending around the money you have, not what’s on its way.
- Pay yourself a ‘salary’ – many consultants transfer a set amount from their business account to their personal account each month, mimicking the stability of a payslip.
- Schedule money admin time – block out a regular slot in your diary for invoicing, chasing payments, and reviewing accounts. Treat it as important client work.
- Reward yourself sensibly – it’s tempting to overspend after a big invoice, but keeping a balance between treating yourself and reinvesting in your business helps long-term growth.
- Track progress, not perfection – some months may fall short, others may exceed your expectations. Looking at the bigger picture across a year gives you a clearer sense of success.
Common myths about self-employed income
It’s also worth tackling a few myths we often hear from HR professionals considering consultancy:
- “You can’t earn enough” – many consultants match or exceed their previous salaries, often with greater flexibility and freedom.
- “You’ll never know what’s coming in” – while income may vary, adopting strong financial habits helps create stability.
- “It’s too complicated” – with some initial learning and the right support, financial tasks soon become second nature.
Tips from experienced consultants
Here are some lessons HR consultants often share after making the leap:
- Invest in good accounting software – tools like Xero, QuickBooks, or Intuit make invoicing, tracking, and tax planning far simpler.
- Get professional advice early – an accountant or financial adviser who understands self-employment can save you time, stress, and sometimes money.
- Don’t underprice yourself – remember you’re covering more than just your salary – your expertise, expenses, and benefits all matter.
- Review your goals annually – revisit your financial targets each year to check you’re on track and to adjust as your business grows.
Why confidence with money matters
Ultimately, getting confident with money is about more than balancing the books. It’s about peace of mind. When you know you’ve got systems in place, reserves for tax, and a plan for the future, you can focus on what you do best – supporting clients and growing your consultancy.
With practice, managing money as an HR consultant becomes second nature, giving you the freedom to focus on your clients and your business.
Ready to explore more?
If you’d like to learn more about what life as an HR consultant looks like – including the practical side of finance – why not download our prospectus or get in touch? We’re always happy to share honest insights into the world of consultancy and help you explore whether it’s the right next step for you.