5 Tips for Smart Money Management In a Gig Economy
In the United States, there are over 57 million freelancers. Instead of working a 9-5 salary job, freelancers pick up gigs and contracts to make money. Living the gig life has its perks. Freelancers have a flexible schedule and are their own boss. As much as being a freelancer is fabulous, however, it also has challenges. One of the biggest challenges is money management
If you’re in need of a little help managing your finances in a gig economy, check out these tips to keep the cash flowing!
Plan a Sustainable Personal Budget
Cash-flow in a gig economy is unpredictable. To create a budget that works, the key is to manage your personal finances and living expenses according to what you can afford in the worst months. During the months when you have more money, you can spend extra on entertainment or travel. You can make this type of budget possible by putting your money in a savings account as you get it, then paying yourself a steady paycheck.
Set Aside Taxes in a Savings Account
Whether you’re a freelance writer, Uber driver or short-term nanny, you have to pay self-employment taxes on the money you earn as a gig worker. To make sure you have the money you need when tax season rolls around, set aside some of your paycheck when you get it. How much? A good rule of thumb is 20%. Tax professionals also recommend that full-time gig workers pay taxes quarterly instead of annually.
Save a Healthy Emergency Fund
As easily as money can flow, it can also stop. In a gig economy, there are going to be times when work is slow and money gets tight. For this reason, it’s important to have an emergency fund. Start your emergency fund by setting aside at least $1,000 so you’re covered in case of personal injury, illness or other unexpected expenses. Then, work to create a savings account that could cover a few months of expenses if you are out of work.
Allow For Business Expenses
When you work a 9-5 job, your employer pays for things like your work computer and professional development. In a gig economy, you are responsible for all of your expenses. Here are a few tips on how to make it work. If you’re a writer, set aside money for the things you know you’ll need like computer repairs or a new model every few years. Or, you might need to budget for regular car maintenance if you gig with a company like Uber. By having money for business expenses ready when you need it you can sit back, relax and spend more time having fun!
Create Multiple Streams of Income
The best way to make sure you always have money in a gig economy is to create multiple streams of income. Whether this means figuring out a few different ways to find work or managing a side hustle—if you have more than one way to make money, your bank account is less likely to run on empty. Multiple streams of income can also help you reach bigger financial goals like buying a house, creating a retirement plan or paying off student loans.
BREAK INTO THE GIG ECONOMY WITH SNAGAJOB
If you’re looking to break into the gig economy so you can enjoy being your own boss, check out the listings for part-time and contract jobs on Snagajob. Find a job you like, apply, follow these steps for money management and you’ll be on your way to success in no time!
