In the ever-evolving world of work, more and more individuals are turning to temporary and on-demand jobs as their primary source of income. Whether it’s driving for a rideshare service, working as a freelancer, or picking up a few shifts through platforms like GigSmart, the flexibility and variety offered by these jobs are undeniable. However, one of the biggest challenges for on-demand workers is managing their finances when income can fluctuate significantly from week to week or month to month.
With the ebbs and flows of income that come with on-demand work, it’s easy to feel overwhelmed when it comes to budgeting, saving, and managing irregular income. But with a few practical strategies and financial tools, temporary and on-demand workers can take control of their financial future and create a stable, sustainable financial plan.
Traditional budgeting methods—where you allocate fixed amounts to specific categories each month—might not be effective for those with irregular income. Instead, on-demand workers should focus on creating a flexible, prioritized budget that accounts for both essential expenses and savings goals, while leaving room for income variability.
Start by tracking your average monthly income over several months to get a sense of your income range. This will give you a more realistic picture of what you can expect each month, even if it’s not exactly the same amount each time. From there, prioritize essential expenses like rent, utilities, and groceries, and allocate a portion of your income to savings. Anything that remains can be used for non-essential spending or rolled over to cover future months with lower income.
When income is irregular, an emergency fund becomes even more crucial. This fund acts as a financial cushion, helping you weather periods of low earnings or unexpected expenses. Aim to save at least three to six months' worth of essential living expenses in an easily accessible account. For on-demand workers, this may take some time, but it’s important to get started as early as possible.
Consider setting up an automatic transfer to your savings account every time you receive payment, even if it’s a small amount. Even saving a modest sum consistently can add up over time. By having a safety net in place, you’ll be better equipped to handle unexpected challenges, like a slow week of work or an emergency medical expense.
When your income varies from one week to the next, it’s important to track your earnings carefully and adjust your spending accordingly. Use tools like spreadsheets, apps, or platforms such as Balance to track your income and expenses. This can help you understand your earning patterns, make informed financial decisions, and identify any areas where you might be overspending.
Additionally, if you're working for multiple platforms or taking on a variety of gigs, it’s essential to keep detailed records of your earnings, invoices, and receipts for tax purposes. Many temporary and on-demand workers are classified as independent contractors, which means they are responsible for their own taxes. By staying organized, you can avoid last-minute tax-time stress and ensure that you're setting aside enough for quarterly tax payments.
As an independent contractor or gig worker, you're likely responsible for paying your own taxes, which means you’ll need to plan ahead. One way to do this is by setting aside a portion of each paycheck for taxes. A good rule of thumb is to set aside 20-30% of your income for federal and state taxes, depending on your tax bracket.
To make the process easier, open a separate savings account specifically for taxes, and transfer a percentage of your earnings into this account each time you’re paid. This will help you avoid the stress of scrambling for money when tax season comes around. You can also work with a tax professional to ensure you’re taking advantage of all available deductions and credits.
Saving for retirement may not be at the top of your list when your income is inconsistent, but it’s important to start planning for the future. Contributing to a retirement account, such as an IRA or Solo 401(k), is a great way to build your nest egg, even if you're self-employed or working multiple gigs.
Retirement accounts allow you to contribute pre-tax income, lowering your taxable income for the year while growing your savings for retirement. If you’re unsure where to start, many online platforms offer resources to help you set up and manage your retirement account. Even contributing small amounts each month will have a significant impact over time, thanks to compound interest.
Technology can be a powerful tool for managing finances. Platforms like Balance provide financial management tools that allow gig workers to track earnings, set budgets, and automate savings. By linking your bank account and payment platforms to an app like Balance, you can see your income and expenses in real-time, helping you stay organized and make informed decisions.
Using apps to track your finances can also help you set goals for saving, paying off debt, and investing. Additionally, they can send you reminders about important tasks, like paying your taxes or making contributions to your emergency fund.
One of the keys to financial stability as an on-demand worker is income diversification. Relying on a single gig or platform can be risky if the market fluctuates or you experience slow periods. To protect yourself from volatility, consider branching out and taking on multiple types of work or diversifying the platforms you use. By having a broader range of income sources, you can smooth out fluctuations and reduce the impact of seasonal or unpredictable changes in demand.
Managing irregular income can be daunting, but with the right financial strategies in place, temporary and on-demand workers can take control of their financial futures. By budgeting flexibly, building an emergency fund, saving for taxes, and planning for retirement, gig workers can achieve financial stability and long-term success. Leveraging financial tools like Balance can simplify the process, helping you track your progress and stay on top of your finances.
With careful planning and a proactive approach, on-demand workers can thrive financially, even in an unpredictable work environment.
About the Author:
Guest post written by Rich Oakes, President of GigSmart
Rich Oakes, President of GigSmart, is an experienced operations leader with a deep expertise in workforce solutions and strategic labor management. With a background in managing dynamic teams and optimizing staffing strategies, Rich has helped businesses in industries ranging from restoration to technology navigate complex staffing needs. As a passionate advocate for flexible labor models, he leverages his knowledge to drive efficiency, cost savings, and organizational growth. Rich is also a frequent speaker and writer on topics related to workforce agility and the gig economy. Connect with him on LinkedIn at Rich Oakes.
