The world is changing every day. People’s needs and demands are also changing every day. Naturally, because of this, how people work is also changing.
Gone are the days of traditional 9 to 5 jobs. In the last 5 years especially, the world has seen an emergence of the “gig economy”. Gig economy refers to a labour market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.
If you are a freelancer, an artist, a broker, or someone who provides a service on demand- you know the struggle of arranging a steady flow of income for yourself. There will be months where you earn significantly more than what you need; but there will also be months where you fail to cover your minimum expenditure.
In such a situation, it is key to have a financial plan in mind, that is both long-term and sustainable. Given below are tips that people with irregular income should keep in mind:
Earning irregular income forces you to invest your savings very carefully. Any wrong move, and you might find yourself in a liquidity crunch. For safe investments, it goes without saying that you should open a Savings Account. Preferably, a Zero Balance Savings Account. A Zero Balance Savings Account does not require you to maintain a minimum balance in your account, and doesn’t fine you if you fail to do so.
You should make a carefully crafted Investment Portfolio, where you balance risk and safe investments in a sustainable way. You should make investments with regard to your age as well as your investing capacity. You should also be mindful of how much of your money you keep liquid, as opposed to how much you lock in.
The most vital thing any person with irregular income should keep in mind, is to have a rainy-day reserve. A rainy day refers to any such time, when you find yourself in dire need of funds. This can be due to a medical emergency or any sudden heavy expenditure. Opening a savings account will prove to be beneficial for this purpose also.
Due an emergency, you may be forced to stop working for a couple of days. You must ensure you have enough savings to get you through those days. Employees who work for organizations can also ask for advance salary from their employers. People who work contractually do not get to avail this privilege.
As someone who doesn’t have a fixed flow of income, it is extremely important to make a budget for yourself. You must make a detailed estimate of your entire income from various different sources in a month, as well as all your monthly expenditure on rent, food, entertainment, among others.
This will give you an idea of how much money you need to earn, and will ensure that you are on track with your financial goals. It is advisable to make a budget which is conservative in nature, as opposed to ambitious. This will ensure that you earn your minimum basic requirement.
In the gig economy, it is important that you have various channels and avenues open to yourself to earn from. This will ensure that your income sources are well-spaced out and you are not too dependent on one source. In case of complications or delays, being overtly dependent on a single source of income can prove to be harmful.
Different sources also have different growth potential. One job may pay well, but another job, despite not paying as much, might have a high referral value. So, it becomes crucial to realize what value each income sources adds, and how beneficial it might be in the long-term.
You must also look at diversifying your client base. Research must be done on the needs of various industries, and low and high demand phases should be kept in mind.
When you are freelancing and working on a contractual basis, it becomes difficult to develop a strong network of co-workers, as well as build good relations with the people you work. In this situation, it becomes vital to establish strong relations with people you freelance with.
These people come in very handy when you are in need. People refer you to other people, spread word-of-mouth, employ you when you are in need, introduce you to potential collaborators, among several others.
In conclusion, you must remember all these points if you earn irregular income. It is also important, that you know that one is not better than another. A steady flow of income, without a doubt, adds financial security. But it might also curtail your creativity and risk-taking capacity.
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