The term “gig economy” has emerged quite prominently over the years. Also informally known as the “freelance economy,” this type of economy is driven by employers’ short-term, contract-based employment of freelancers.
With the growing influence of virtual workplaces, digitally based work opportunities, etc., the gig economy has become an integral sector that is now being tapped by freelancers, independent consultants, employers, and more.
The recent work trends driven by the COVID-19 pandemic show the gig economy’s promising future. Furthermore, certain advantages of this economy have led to individuals adopting freelancing as their long-term job.
Akshat Shrivastava, Content Creator, tells us how to manage finances as a freelancer.
Freelancers need to practice appropriate financial management methods due to the following reasons:
- Unlike a full-time job, freelancing does not guarantee payment at the end of the month. Therefore, it is essential to manage the finances to fulfill the monthly monetary requirements.
- In freelancing, there is no provision for paid leave, sick leave, etc., to make up for funds that may come in handy in an emergency.
- Expansion of services is an integral part of freelancing as it helps increase the flow of income. Financial planning can help obtain resources and platforms that can help boost the said services.
Financial planning will not commence without a steady flow of income. Therefore, it is important to diversify your portfolio and offer services distributed at a wider scale and range. This can help bring income from multiple sources.
For instance, if you are a freelance graphic designer, diversifying your portfolio from simply offering designing services to making tutorial reels for Instagram, YouTube shorts, etc., can help increase your source of income and add to your credibility and skills.
In a gig economy, the uncertainties around income make it essential to be mindful of your income and expenses. Being reckless with money will only end up with you being left with little or no money by the end of the month.
Make sure you keep track of the money you earn per month, your expenses, savings, etc. You can do this by maintaining a journal. For a clearer insight into the process of tracking, you must keep separate accounts for personal and business use.
One can only look for a solution after they have identified the issue. Planning and budgeting can help eliminate ambiguity, thereby aiding better management of funds. Plan and compile a budget at the beginning of each month and manage your income accordingly. This process also involves tracking, planning, and budgeting for your investments and taxes.
As a freelancer, you must always ask yourself: “Am I making the most out of my income?” Simply earning by providing the same services will not help you grow. Think of yourself as an entrepreneur and remember that unless you invest in yourself and grow, you won’t be able to tap into your target audience, affecting your income flow.
Therefore, research the industry you’re in, re-evaluate yourself and your services, and find ways to flourish better than ever.
Life tends to be uncertain and full of surprises that may or may not be pleasant. Emergencies can often pop up out of the blue and disrupt your work life. Be it a health-related emergency or a giant creative block, a self-employed status causes you to be held accountable for your leaves and day-offs. Setting up an emergency reserve through financial planning is extremely important to make up for the fund requirements during events like these.
The gig economy is an excellent place if you have the skills and determination to make it as a freelancer.
Of course, the challenges are many, especially regarding finances. But, if you can work around them and turn them in your favor, you will be able to ace freelancing.
Note: This blog is an excerpt from a session on Financial Planning for Creators and Freelancers by Akshat Shrivastava, Content Creator. The session was part of Elevate–a global virtual content summit organized by Pepper Content, bringing together industry leaders in content marketing.
Check out the video of the interview here.