Working and budgeting in the gig economy
December 03, 2019
A steady job with a paycheck and benefits may not be a part of the future for some people, and that is just the way they want it.
For many people, being a part of the "gig economy," or an independent contractor, is a great way to work and to live. They have the freedom to choose the work they want and when they want to do it.
According to a report issued last year by Edison Research, almost one fourth of American adults earn money in the gig economy, doing jobs like working for ride sharing companies or selling products or services online.
Along with the reward of being in control of your work, however, you also have the risk of not having a steady income. It can be a balancing act to make sure your income exceeds your expenses every month. The key to managing it successfully is budgeting.
A couple of important reminders for budgeting when your income is not always the same every month:
- Determine how much money you need to earn. Add up all your expenses every month and set a target for your monthly income. You may find that an annual budget works better for you to manage the ups and downs of your income and expenses throughout the year.
- Realize that some months will be more lucrative than other months. With that in mind, make sure you do not spend extra earnings but set them aside to help you manage those months when you work less often.
- Remember that, as a contractor, you will need to plan for those responsibilities usually taken care of by an employer such as income tax payments, insurance benefits, etc.
If you choose to work in the gig economy, you do have to prepare financially since it will not be a steady job. However, you also have an exciting opportunity to create a future with a wonderful work/life balance - and who would not want that?