Financial Planning for Gig Workers

Gig workers usually have more autonomy and independence in when and how they work. That’s the good news. With independence comes volatility, in both workload and earnings. That means gig workers must be even more savvy that traditional workers when it comes to financial planning.

So although the following is great advice for anyone in the workforce, it’s essential for someone whose primary income comes from gig work. Here are some tips to help you start saving and build financial security for the future. There’s no time like the present to start good money habits.

Step 1: Build an emergency fund. Every worker should have some savings to cover emergencies like car and home repairs, unforeseen medical bills, and other expenses that can’t be predicted. It’s especially important for a gig worker who must provide their own equipment or transportation; a car breakdown or computer crash could put you out of work.  Financial advisor Dave Ramsey, whose 7 Baby Steps plan has helped millions of people get control of their finances, suggests a $1000 emergency fund as the first step of his plan.  

Ramsey also offers a product called Ramsey+ that offers budgeting and saving tools to helps people get control of their money and start saving. Find information here.

Step 2: Get to know where and how your money is spent and reduce expenses wherever you can. Getting a handle on your living expenses is a prerequisite for the next step. Smart gig workers know that living below your means is the key to financial independence. This is a great time to take a long hard look at your monthly budget and find expenses you can cut and ways to save. Once you have your living expenses under control, you can determine what you’ll need to cover 3-6 months of essentials like rent or mortgage, utilities, insurance, transportation, and essential expenses like food. You’ll also know what you’re spending on “nice to have” amenities versus “must have” budget items.

Step 3: Save for 3 – 6 months of living expenses.

I hear you – it will take a while to build up those savings. Don’t let that discourage you. Every bit of disciplined saving will make a difference. Companies like Acorns help you set up plans for saving and investing, starting with spare change. Acorns says its customers invest an average of $30 a month just by rounding up your purchases (if you spend $2.75 on a cup of coffee, Acorns will round up to $3.00 and invest the 25 cents.)  

Saving is easier when you have a specific goal (like the $1000 emergency fund or 3 months of expenses) because you can measure your progress.  But you don’t need an outside system to start saving. It just takes discipline to set aside $50 or $100 a month toward your emergency fund or expenses fund. This may even be the best time to start, since the pandemic has limited options for spending on entertainment and travel.

Turn saving into a habit by resolving to save just a dollar or two a day. Take your daily spare change or $2 from your wallet and put it into your savings envelope. At the end of the month, you’ll have at least $60 saved. Deposit it into a savings account separate from your checking account so it’s safe from (your own) pilfering. At that pace, you’ll have almost 75% ($720) of your emergency fund saved in a year.

Need more inspiration? Here’s a Dave Ramsey blog post on how to start saving money.

Here’s the interview I did with a young worker who embraces the FIRE lifestyle (Financial Independence, Retire Early.)

2 thoughts on “Financial Planning for Gig Workers

  1. This can have a major effect on your retirement planning if you are a gig worker


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