Being an independent insurance claims adjuster has many perks. It is a flexible career that allows you a certain amount of freedom over your time. It can also be very financially lucrative. The average annual income for independent adjusters in Texas is around 60,000 a year, but many seasoned and/or talented adjusters make much more.
However, there are pitfalls to the above average salary that independent adjusters enjoy. There are very busy times of the year, such as storm season. During these times, adjusters bring home large paychecks due to volume of work. But during slower times, there may not be much work at all. This means that in addition to all your other skills as an adjuster, you also need to be very shrewd with your personal finances. Without careful planning and saving, even adjusters who make a high salary can find themselves in a difficult position when business slows down. Here are some tips for making sure you stay financially secure year-round, and for years to come.
Managing Your Income
One of the challenges to being an independent adjuster is managing your income. You essentially live in a feast-or-famine financial environment. There are periods with lots of work and big paychecks, then other periods with significantly less work and smaller paychecks. It can be challenging to navigate this type of variable income. It can be tempting to overspend during those windfall months. If you do, you’ll find yourself struggling during the off-season.
As an adjuster, you are essentially your own small business. Therefore, a solution to this problem is to treat it like one. Create a business account for all your income. Then, set up a transfer weekly, bi-weekly or monthly to your personal checking account. This way, when your large checks come in, you are still only paying yourself the allotted salary for the time period. The rest stays in the account for the slow season, taxes, expenses, and yes, savings.
Speaking of Taxes and Expenses
As mentioned above, your job as an adjuster is a small business-of-one. Because you are a contractor, your insurance company or adjusting agency is really more like your client than your employer. They aren’t paying payroll taxes on your behalf, so you will be responsible for that at tax time. You also have to pay for things that are considered benefits as an employee. This includes your health insurance, days off, and retirement plan. You will also be on the hook for things like your vehicle, travel expenses, equipment, software, and other costs of doing business. When deciding on the amount of your income that you use to pay yourself, it’s important to keep these factors in mind.
Some of your expenses are also tax deductible, so it’s important to keep track of your receipts. This can be challenging when you are traveling. Thankfully, there are numerous options for expense tracking now that allow you to take a photo of your receipts and add it to your bookkeeping software right away.
Don’t Be Afraid to Ask for Help
If this all sounds incredibly confusing and overwhelming, don’t be alarmed. If you had wanted to be an accountant, you probably would have done so instead of becoming an insurance adjuster. That’s why it’s a great idea to get outside help from a CPA, financial advisor, and/or tax professional. They can look at your average income, your expenses, and your tax liabilities and help you make better decisions for your financial situation. Yes, these professionals cost money, but they are worth their weight in gold for the security and peace of mind they provide.
Plan For Education with 2021 Training
Finally, it’s important to account for training in your overall expenses. 2021 Training is a one stop source for launching your adjusting career and for your continuing education needs. We can help you stay up to date on new technology, legal matters, changing procedures, and more. Click here to find the right courses for wherever you are in your career.