In previous articles, I introduced the Gig Economy and how we can either choose or become forced to jump into it. The Gig Economy is the major trend in the world of employment and career life. It challenges our culture’s concepts of success and creates chaos around how we manage finances and time.
Most people think that traditional jobs are “safe” because they provide benefits and a steady income. However, this is rapidly changing: employers are switching to hiring contract workers and consultants for specific projects or tasks and even those who still offer full-time employment are passing the burden of planning and saving for retirement to employees. Fewer companies are offering retirement packages and employees are expected to share the cost of extended health, insurance and professional development.
Moreover, when all your lifestyle depends on the income you earn from one employer, you become a slave of your “job stability”. The reality shows that companies can lay off employees overnight, employment insurance is becoming harder to get and covers shorter periods each time, and employers are cutting on benefits, holding off on salary raises and increasing workload and demands on employees. Most companies don’t offer severance packages either and entire sectors of the economy have demonstrated no area is stable forever.
In the Gig Economy, you may get big pay for a project or contract but you lack life, health and employment insurance, professional development funds and paid vacation. In some cases, you are also responsible for supplies and utilities (when you work from home) and the repair of your work tools (computer, printer, etc.). Apart from this, your earnings may vary greatly from gig to gig and there will be periods of multiple gigs (and multiple sources of income) and others with no gig (or income) at all.
Learning to manage your finances becomes essential!
- Revise your values and priorities and your re-definition of success (second article in this series): is the lifestyle you are leading aligned with them?
- Assess how you are using your money: what are your 2-3 biggest income eaters? Is owning a house (or a car or a boat) so important to you? Can you downsize, rent or move to a less expensive community?
- What big areas of your life can you re-assess and design so they become more sustainable for when income is not steady? Examples may include: grow a percentage of your veggies, fruits and herbs; rent the tools or workspace instead of owing it all; share your space with like-minded people for a small rent; buy in bulk with a friend or network and share the expenses; cook in bulk, seasonal and from scratch; preserve foods when in season and cheap; reuse, up-cycle and repair instead of buying new; re-think what you truly “need”.
- Trade and barter for goods and services instead of paying for them so your expenses are reduced and you create a much steadier and safe net: community support net!
- Consider access as opposed to ownership: this reduces costs and creates stronger community relationships that may lead to future gigs.
- Save any windfalls from tax refunds, big gigs’ pay, inheritances, etc. Consider this money your “safety network” for those in-between gigs, no-income days.
- Create a budget that allows you to live on the lowest income possible or on one income if you are a couple and save anything you earn above and beyond that or use it to pay debts.
- Plan for a life without debts: debt is the new slavery system that keeps you attached to an employer, sector or job you don’t like, apart from creating stress and anxiety.
- Assess your risk threshold and your current situation and get the support of a financial planner with experience with self-employed workers.
By learning to manage your own finances and re-defining success for you and your loved ones, you re-gain control over your life and career decisions. Even if you have a traditional job with a steady income, you know this may not last forever. Making your own decisions also gives you the freedom to negotiate, change jobs or take time off to reconsider your priorities, get some training or start your social enterprise!