How to manage your finances to thrive in a gig economy

Gig workers are those who are not involved in a traditional employer-employee relationship. These are people that are their bosses, also known as freelancers. India’s gig workforce is expected to reach 23.5 million* by 2029-30. Presently it comprises 47% medium-skilled jobs, 22% high-skilled jobs, and 31% low-skilled jobs. The pandemic has helped people realize that the gig economy has a larger scope as bosses are willing to hire talent rather than putting them on a payroll. 

As the gig economy is gaining significance, people are enjoying the benefit of being their boss. Although in such an economy, the income earned is not stable, thereby lacking reliability. Hence, you need to fortify your finances. Here are some tips:

1. Purchase a health plan

Not having a stable source of income may be scary for a while but making the right provisions will safeguard you from future losses. As we know, health is wealth. The first thing you need to ensure is that you subscribe to a health plan that covers your loved ones as well as yourself. In emergencies, you will realize its utmost importance. One of the health plans is provided by HDFC Life – Click 2 Protect Optima Secure plan. 

2. Create an emergency corpus

Life is always full of ups and downs. To overcome any situation, having a financial back-up works in your best interest. Managing your finances effectively and creating baseline living expenses allows you to save efficiently. 

3. Invest for the future

One cannot work throughout their whole life and eventually most people retire. During your retirement phase, you are not taking up any gig and thereby have no work income. Thus, it pressurizes one to earn higher payouts to save for the future. Investing in the future means investing in yourself, your health plan, your loved ones who will be there for you, and more. You can earn higher payouts by upskilling yourself too. 

4. Separate your ‘gig’ finance and personal finance

If you have begun your own gig, the key focus is to grow the same. A gig usually requires capital during crisis or expansion, during such a phase you might think it is acceptable to invest personal capital. But it is not. Do not mix your personal and gig finances as it may lead to miscalculated accounts and possible loss on the personal front.

The gig sector is gaining importance as it offers better income opportunities and has occupational mobility. Gig workers are also considered to be independent contractors. Thus, having self-social security in regards to insurance, pension, and family safety is important. The motive is to not lose sight of the bigger picture and be consistent in investing. 

(*Source: https://www.business-standard.com/article/economy-policy/indian-gig-economy-to-have-23-5-mn-workers-by-2029-30-niti-aayog-report-122062701069_1.html)

ARN: ED/10/22/29827