Who Says Gig Employment Doesn’t Let You Save? Here’s How You Could Do It!
The internet boom has made it possible for people to work at a time that is convenient for them and from anywhere across the world. However, this is just one of the few reasons to have gig-based employment. The flexible work hours, no dress code, not having to commute to work, the list is endless. But there’s a popular misconception about gig-employment and having a variable income. People tend to believe that you cannot save money if you do not have a fixed source of income. However, that’s not true. Here’s how you can save every month despite having a variable income.
The 60/40 Rule
While this is the basic step to getting started with a life of financial security, it is also the toughest one. However, if you make up your mind and learn to live with a certain financial discipline, it will keep you future-ready. The key is simple, as the title suggests, the idea is to save 60 percent of your income and spend 40 percent of it. This is important because your income isn’t fixed all months, so in months when you make a lot of money you save a lot. However, in months where your income isn’t a lot, your savings would be minimal too. But, on a rainy day, the money that you saved in the months you made a lot of money will come to your rescue.
Compare this against a situation where you try to save a fixed amount of money every month. Assume you make a decision to save $100 dollars every month and make over $2000 in the first month and $200 in the second month. End of the two months your investments would be just $200. However, if you stick to the 60% approach, you would have saved $1200 in the first month and $120 in the second month.
Stick to a Budget
Chalk out a budget with all your expenses market out. Leave some money aside for miscellaneous expenses too. Do not go beyond the budget at any cost. This will help you plan your expenses better, save more, and live a worry-free life. It is important to stick to the budget, but remember, to remember to stay open to changes. This means you will have to revisit the budget every quarter or once in six months. This will help you allocate funds to yourself according to your changing needs. The flexibility will serve as an encouragement to stick to the budget.
No matter how much you make, always live a low-key life. Meaning, live a life that you can afford even in the worst of your months. This will not just leave you prepared to deal with the worst, but will also help you add to your savings. Do not splurge on days when you make a fortune, instead, put everything into your savings and continue sticking to your budget. As your income is variable and the gig-economy is unpredictable it is more important for you to have a higher range of savings than someone with a fixed income.
For instance, you could try and cook for yourself on most days rather than visiting a restaurant. This will help you save ample money along with keeping you healthy. You could also cut down on shopping as you might not need a lot of work clothes considering that you might be working from home on most days.
Have Multiple Investments
Do not put all your eggs in one basket! A golden word of advice that every person gives when talking about managing finances holds true even here. The last thing you want to know is that the market is crashing or there’s a lock-in period on your investments. So, have multiple pockets of investments and each of them for a varying period and purpose.
You can also automate your investments so that you do not skip out on them. Having at least two to three investment plans in an auto-debit format.
Discard the Credit Card
The biggest enemy to savings for any person is their credit card. While the credit score would be of great help to you in times of loan application, it might also be the reason you will need a loan. Your spending will be more conscious when you spend out of your pocket The annual maintenance fees, the credit card costs, etc., only add to your expenses. Not to forget, a credit card might push your spending over your budget.
We hope these tips were helpful! Always remember to save before you spend. That way, there will never be a day that you will regret pursuing your passion or having a variable income.
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