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3 Money Tips For The Gig Economy

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  • 3 Money Tips For The Gig Economy
    #2467
    Mohsin Raza
    Participant

    The “gig economy” is where people typically find temporary, short-term jobs as independent contractors, consultants, or freelancers. A “gig” is a one-off job or project. Someone working in the gig economy, sometimes called a “gig worker”, will often move from one job or project to another. It can be a way to make extra cash but for some people, it is their main source of income.

    1)Budget

    Budgeting can be tough, but it’s essential as a gig worker to plan for your income and expenses, especially if it varies significantly each month. In addition to budgeting for basic living expenses like food or rent, you’ll need to set money aside for taxes too. As an independent contractor or freelancer, you’ll be responsible for remitting taxes to the government.

     

    It can be difficult to estimate the amount of taxes you’ll actually owe at the end of the year. Consider setting aside 20-30% of your income for taxes. As an independent contractor or freelancer, you may be able to deduct certain business expenses. Remember to keep records of your expenses.

     

    2) Build an emergency fund

    An emergency fund can help you when you are unable to work, like when you’re sick, or when you have to deal with unexpected expenses, like car repairs. Keep your emergency savings in an account that you can easily access on short notice like a savings account or cashable GIC.

    A general rule for emergency savings is to have enough to pay today’s bills plus living expenses for 3 to 6 months

     

    3) Save and Invest

    Whether you plan on working in the gig economy temporarily or permanently, you’ll still need to think about your financial goals like saving for an education or preparing for retirement. While irregular cash flow is a reality for many gig workers, the earlier you’re able to save and invest, the larger your money will grow due to the effects of compounding.

     

    If possible, allocate 10-20% each time you are paid towards savings and investments. You can make the process easier by setting up automatic transfers through your financial institution.

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