From the Desk of Daniel Goodman

Goodman's Guide for Gig Workers:
Three Tips for Saving Money

Freelancers, or gig workers, are different from the traditional workforce in several ways. Freelancers typically have more flexibility in work location, hours, and job duties. They like to control when, where, and how they work. Financially, they receive an uneven stream of income and need to pay more attention than a traditional worker to things like how and when to pay income taxes and where to find health insurance. These financial differences mean gig workers need tailored advice specific to their situation. Here are a few important tips to make sure you get started on the right track with your finances.

  1. Create a Budget
    Budgets are important for everyone, but particularly important for freelancers. Building a budget and sticking to it is one of the most important ways to achieve your financial goals. Budgets help you reduce or eliminate frivolous expenses and plan for other expenses that can catch you off guard (like your car insurance premium every six months). As a gig worker, it will be harder to plan for a consistent income, but you should create a budget to plan on minimizing your variable expenses such as food, gas, entertainment, and utilities, particularly when starting out. Then, when you have periods with higher income, make sure you save or invest the extra cash rather than splurge on unnecessary items. Lastly, I would recommend you keep your business budget separate from your personal budget, which I discuss in more detail below.

  2. Build your emergency fund
    Everyone should have an emergency fund. Emergency fund savings take priority over any other kind of saving or investing. It should be built first because it helps you prevent financial crises on top of existing emergencies. You do not want to have to use a credit card with a high interest rate every time you have an emergency – that would be a financial crisis. Emergencies are unpredictable, unplanned, and need immediate attention, for example, when the water pipes in your home burst and flood your kitchen while you are on vacation or a 6-month gig you were planning on starting tomorrow falls through. Life just happens (with or without our permission) and we cannot prevent these types of emergencies. What we can do, however, is prepare for them financially.

    The standard advice is to have 3 to 6 months of income saved in case of an emergency. My advice to gig workers would be to increase that amount to nine months of income savings. Gig workers, by definition, do not have a steady, predictable paycheck arriving every two weeks. Therefore, increasing the emergency fund is a prudent way to prepare for those dry spells that may be more likely to occur.

  3. Keep separate business and personal accounts
    While traditional workers can simply open personal bank accounts and credit cards, gig workers should have accounts set up for both their personal use and their freelance business. This will make it much easier at year-end when you need to file taxes. It will also make it easier to budget for business versus personal finances – two very different worlds.

Successful gig workers have the flexible work arrangement they desire, but along with it comes a unique financial situation. I am here to help you navigate that situation. Feel free to contact me or use the buttons below to get started.

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