6 Smart Money Moves To Make To Feel Financially Secure Without a Full-Time Job
Written by
Gabrielle Olya
Edited by
Chris Cluff
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More Americans are moving away from the 9-to-5 way of working in favor of taking on freelance or part-time roles. According to Upwork data, 39% of the American workforce now does some sort of freelance work.
There are a number of advantages to this way of working: increased flexibility, more control over when and how you make money, the ability to work from wherever you want and being your own boss. But there are also challenges that come with not having a full-time job, including the lack of job security and having to provide your own benefits.
Because of these challenges, being a gig worker often means you have to take extra steps to feel financially secure. Here are some of the money moves to make if you want to keep your finances on track without a full-time job.
Build an Emergency Fund
An emergency fund can ensure you don’t go into debt if you are experiencing an unexpected lull in income.
“Income can be unpredictable for workers in the gig economy, so it may be beneficial to develop an emergency fund that covers three to six months’ worth of living expenses,” said Jared Hubbard, fintech product manager at Plynk Invest. “This might help you feel more financially stable during slower periods of work and allow you to manage unexpected expenses without severely impacting your daily spending.”
Set Aside Money for Long-Term Investments
As a gig worker, you likely don’t have access to employer-sponsored retirement savings tools like a 401(k). This means you need to be more proactive about investing for the future.
“Allocate funds for key priorities like investing and building a nest egg for the future,” Hubbard said. “Even in small amounts, investing early and consistently may set the foundation for long-term financial security.”
Hubbard recommends regularly putting aside money into a diversified portfolio.
“[This] may help you take advantage of compounding growth and support your goals to accumulate wealth over time,” he said.
Keep Personal and Business Expenses Apart
Consider opening a separate business bank account for the money you earn from gig work.
“This assures clarity on what is deductible, streamlines the process of tracking expenses and facilitates tax reporting,” said Steven Kibbel, CFP, senior editor at InternationalMoneyTransfer.com. “To establish credit for your company and maintain good financial records, use a business credit card for work-related expenses.”
Be Prepared To Pay Taxes
Setting aside money for taxes should be incorporated into your budget.
“Freelancers and gig workers are in charge of their own taxes,” Kibbel noted. “To prevent surprises when it comes to filing your taxes, save 20% to 30% of your income. To avoid fines, submit your anticipated quarterly taxes to the IRS.”
To avoid having to scramble each quarter, carefully track your income and spending on an ongoing basis.
“To keep tabs on your earnings, outlays and deductions, utilize software programs like FreshBooks or QuickBooks,” Kibbel said. “This simplifies tax time and guarantees you don’t lose out on deductible expenses such as equipment, mileage or home office costs.”
Obtain the Correct Insurance
Providing your own insurance can be costly, but it likely will save you money in the case of an emergency.
“In the absence of job benefits, gig workers should research health insurance choices, such as those offered by the healthcare marketplace, as well as liability and disability insurance to safeguard their finances in the event that an illness or accident prevents them from working,” Kibbel said. “Your personal assets will be safe from business-related lawsuits if you get self-employed liability insurance.”
Diversify Your Sources of Income
Be savvy about the different types of jobs you take on.
“It’s a good idea to have several part-time jobs or gigs, but make sure they’re in diverse industries,” Kibbel said. “This guarantees you always have a source of income, lowering the risk in the event that one industry slows down.”
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