Flexible finance for the freelance

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If you don't have a regular, monthly salary, you may be treated warily by the financial services industry, warns Roger Trapp.

In a recent report issued under the auspices of the RSA's "Redefining Work" project, it was acknowledged that the financial services industry had been slow to respond to changes in the workplace.

Commentators suggest that many practitioners are still so traditional that they would, for example, regard a middle-aged miner as a better bet than a young information technology consultant. This is because while the miner has probably only got a few working years left to him, he is employed full-time - in contrast with the IT consultant, who could have a very prosperous future, albeit based on contracts and assignments rather than full-time positions.

The differing treatments are most apparent when applying for a mortgage. A recent graduate, say, in their first job will be in a much better position than the freelance, who will have to supply three years' accounts indicating that they have sufficient income to cover the payments and other outgoings. However, Amanda Davidson, of the London-based independent financial advisers Holden Meehan, points out that many lenders are becoming more aware; they will, for example, accept that people can be paid in lump sums rather than in regular monthly amounts and make their calculations appropriately.

Flexibility is, however, much better established in the pensions arena. Though regular monthly payments are regarded as the norm, it is perfectly acceptable to make lump sum payments at any time in the year. It is less advisable to stop and start regular payments. Ms Davidson says that she recommends clients to put something fairly modest into a pension every month on the grounds that it is "good discipline" and then top this up with lump sums, depending on income flow. Savings, she adds, are "incredibly flexible". But there needs to be a combination of secure savings and money accessible in an emergency or if income flow slows down, putting regular commitments at risk.

Finally, a word of warning. Personal finance experts point out that self- employed people can be tempted to take out policies that provide protection against loss of income through illness or accidents. But such schemes can be expensive and also highly selective in the conditions they cover. It may be better simply to keep enough funds in reserve to cover such eventualities.