This guest post was written by Jackie Edwards. Now working as a writer, Jackie started her career in IT and software development, but after becoming a mom refocused and decided to spend more time with her family. When she’s not writing, she volunteers for a number of local mental health charities and also has a menagerie of pets to look after.
When money is tight, standards of living can cause an impact on the socioeconomic stem of the social environment. Productivity is often measured by output and when psychological factors impair the worker’s ability to produce, the financial consequences can be pretty dire.
Psychological and medical peer-reviewed research journals have published studies which give indications that stress and depression can be catalyzed by financial circumstances. The power then lies in the individual to take control of his or her own financial success, which can be a difficult thing to do while embracing the uncertainty of freelancing or working on various temporary projects.
As more and more people are venturing into the gig economy, here are some tips for maintaining financial security.
Avoid or Limit Debt
In March 2017, the New York Federal Reserve’s report showed that the collective household debt in the U.S totaled $12.73 trillion. Most of it was made up of credit card debt, showing just how volatile the environment of revolving debt can be. This surmises just how important it is for people within the gig economy sector to take a firmer grip in their financial situations. Know exactly what is happening to your money and how you can reproduce your dollar into money that can allow you to ring-fence your life and protect your family.
Aquire Financial Savviness
Money sense is not a genetic or social ‘already have’ concept, it’s an acquired skill. Simply put, you need to learn how to manage money in order to retain more of it in your pocket, without compromising the essentials such as medical coverage.
Fortunately, there are ways you can take advantage of free learning tools to know how to better manage your money. Even starting off with using the free IRS tax tool, could prove beneficial in ensuring your money savvy techniques are practical.
Create a Contingency Fund for the Three Tiers
Working in a fluctuating environment makes financial management crucial for the ‘gig’ economy worker. When you don’t have a static representation of your weekly or monthly income, it becomes important to understand the benefits of saving and how to ensure that money becomes a stabilizing force.
Primary – Saving a percentage of your pay for immediate emergency prepares you for the unexpected events. It acts as a cushion which may prevent financial disarray from occurring.
Secondary – ideally suited for goals that need to be achieved within a few months or years. Wedding, holidays, maternity or paternity leave and other such financial requirements allow for money to be there when it is needed.
Tertiary – Pension savings which can act as your pension plan. Couple this with an actual retirement policy then you are sure to have covered most of the requirements for personal financial success.