According to a study conducted by Fiver and Upwork, it was found that more than 57 million people prefer gig careers rather than conventional 9 to 5 jobs. No wonder the flexibility and freedom that come with this role make it highly lucrative.
However, the gig economy needs to be more consistent and varies according to the availability of gigs, which makes the survival of the gig workers challenging. Hence, you must manage your expenses wisely while saving money for your future. But the question arises: how? Read this article ahead to know more!
5 Useful Money Tips for Gig Workers
If you are new to this market, it will be challenging to manage your financial expenses, so managing your money is essential. Follow these five helpful money tips to save money:
Reducing your expenses
It is essential to reduce your expenses to save money. You must find places where you can save money irrespective of your earnings. You should only spend money on necessary expenses such as entertainment or shopping if you can avoid them. Devise ways to lower your costs, like opting for an annual rather than a monthly plan to get a better discount. Moreover, keep a budget in mind while shopping or buying groceries so you do not spend more on them.
Having an Emergency Fund
Life is unpredictable, and you must be prepared for the worst. Different from regular jobs, gig jobs are inconsistent, making it difficult to cope with such situations. In such scenarios, the only solution is a cash advance for gig workers through loans, credit card advances, and payday loans. Such loans pressure the gig workers, so having an emergency fund is essential. Your emergency fund must have enough money to meet the expenses for the next 3 to 4 months. You must save at least 20% of your income as your emergency fund.
Monthly Budget Planning
Knowing your monthly budget is essential to identifying and comparing your living expenses with your income. Since you do not have any fixed income, it becomes tough to prepare a budget. Hence, rather than going for a restricted budget, you should go for a minimalistic budget. Such a budget focuses on essential needs while cutting down on unnecessary expenses. Thus, monthly budget planning will help you manage your financial goals while keeping your monthly income in mind.
Paying taxes quarterly
Whether you are a gig worker or a regular employee, you must pay taxes. But unlike regular employees, where the taxes are deducted directly from the salary, you must save a portion of your monthly money to pay your taxes. Take your time with the end, as the amount can be enormous. Instead, pay your taxes quarterly in small installments instead of paying a lump sum amount at the end of the year.
Saving for your retirement
In a gig career, you are your boss. Hence, you need to manage and take care of your retirement plans. Unlike office jobs, gig jobs do not offer funds for retirement. You must start saving 5 to 10% of your gig income as retirement savings in a separate bank account. You must consider retirement savings an expense; therefore, you must save this money for your retirement.
The Final Words
The gig job offers perks such as freedom and flexibility, but on the other hand, it can take a lot of work to manage your expenses. Hence, having a proper budget and following the above tips can help manage your costs. Moreover, having a sound financial plan assists you in making the right financial decisions while saving for your future.