4 money tips to thrive in the gig economy
Currently, millions of people are working as freelancers across the globe, and the one thing they’re always scouting for are gigs. If you’ve never heard of the phrase gig economy, you might’ve heard of the term gigs. It’s mostly associated with side hustles or as-needed basis jobs and is usually short-termed.
With the gig economy progressing, workers are doing their best to get by and ease their financial worries. Managing your financial budget takes a lot of strategizing and calculation, especially when your income varies depending on the work you book. At that point, it does feel like surviving in such an independent environment can be mentally taxing, but with the right survival skills and practices, you can learn to thrive in the gig economy.
Here are some tips to help you achieve that.
Tip 1: Plan for your budget to reflect your income
The thing with freelance gigs is that your income fluctuates constantly. Depending on the scope, duration, and size of the project, the amount you make can be sufficient to last you a month or not. If this is your sole source of income, then it’s crucial to plan your spending according to the money you make to help you get by.
Planning a minimalist budget can help you stay afloat when the income is unsteady, and you’re still trying to land a solid position in the gig economy. Think about the entities in your budget that you can control, food, gas, heating, utilities, and entertainment facilities. Making sure that these expenditures stay as minimal as possible can help you manage your income. It also helps you stay determined and motivated to move forward and aim for bigger projects.
Most importantly, since you’d have based your budgeting plan on a lower income, you’ll have leftover money when you start earning more.
Tip 2: Keep growing your emergency fund
Another hard-hitting money tip to help you succeed in the gig economy is saving cash for an emergency fund. Emergency funds can come in extremely handy for unpleasant situations when the cash flow is tight. Similarly, it’s quite useful during the months when the income is lighter, and you’re unable to find lucrative gigs.
Your emergency fund should be able to afford three to nine months of living expenses for the colder days, so you’re not struggling to pull out cash for basic necessities. It’s recommended to start setting aside money for an emergency fund during your best months rather than blowing your earnings in one go. Set a target for your emergency reserve during your lower-income months, and when you’re earning higher, try to exceed that limit to keep your savings growing.
Future planning as a freelancer is incredibly challenging and requires constant assessment of your finances. Some days you have money in the bank, while on other days, it seems to be drying up. This is also why you should have separate funds stashed for retirement. After covering your basic necessities, go for paying off any debts or loans you may have taken, and then put away money for retirement. If you can’t spare any money initially, that’s okay, but you can create a retirement plan that’s realistic to your budget and then add to it as you grow.
Tip 3: Pivot your financial goals to the situation
You might find that your contract with a company that focuses on digital marketing is coming to an end, which leaves you grappling to find a different client that fits your financial needs. This is why you must always be prepared for when an issue like this arises, as this can cause an abrupt change in your workflow and earnings. Being able to adapt and pivot your financial goals according to the circumstances so in case one of your gigs dries up, you’re not hugely impacted.
Naturally, encountering a decline in your income can put a dent in your financial plans. Maybe you are trying to pay off a loan or starting a retirement fund. You will eventually have to put one of these plans or both, in some cases, on the backburner until you find a replacement gig.
Tip 4: Stay away from debt
Freelancers are more prone to falling into debt when they are unable to find work or don’t have good-paying clients. This is why freelancers are advised to keep emergency funds that can last them up to nine months or during days they’re unable to make a lot of cash. For instance, if you’re planning on expanding your business, you should only invest when you have the room to spare those expenses.
You can start small when it comes to building your savings so that when the time comes, you can easily access those funds during emergencies. Keep in mind that debt only acts as a roadblock between you and your financial goals. It only further slows down your progress and interferes with your productivity levels.
This is why you must choose your jobs wisely. For some freelancers, their gigs are their main source of income, which means that they must land the right one in order to be able to make enough to last them a month. You’ve got to make sure that the business or company that you’re working for is not creating any complications and causing you more loss than gain.
Ask yourself, are they committing to pay you on time? Are they providing the right resources for you to complete the given task on time? Are they slow when giving payments? Once you have the answers to these questions, you’ll be able to find a suitable client that’ll help you reach your financial goals.
These financial tips can help you find your footing in today’s tantalizing gig economy. Mastering the newest techniques and gaining new skills is beneficial for you in terms of gaining good paying clients and gigs. As a freelancer, it is important that you maintain your business and manage your finances accordingly. While it is not easy, the reward of your hard work is more than satisfying.
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