Many people are turning to gig work or freelancing, but managing finances can be a challenge. Elizabeth Renter, NerdWallet’s senior economist, notes that the current labor market is not friendly to workers, making nontraditional jobs more appealing.

Setting a Baseline

To budget with an irregular income, it’s essential to set a baseline for take-home pay. This involves understanding the minimum amount needed to cover monthly bills. Rami Sneineh, co-president of Insurance Navy Brokers, advises setting the lowest-earning month of the last 12 as the baseline.

Once you have your baseline, you can use it to plug into your chosen budgeting method. It’s crucial to prioritize saving for emergencies, as the unpredictability of gig work makes it even more important. Lucy Todd, a career coach and freelance writer, prioritizes emergency savings and tries to diversify her gigs.

Taxes and Healthcare

Gig workers also need to plan for taxes, as they may need to make estimated payments to the IRS. Jesse Wideman, a certified financial planner, recommends saving around 25% of earnings from 1099 income. Additionally, gig workers may need to plan for healthcare, as they may not have access to company-sponsored health insurance.

Todd uses automatic transfers to contribute to her Roth IRA regularly, but notes that she’s not saving as much as she’d like. Despite the challenges, she finds the freedom of gig work to be worth it.

Original reporting: KTBS 3 (Shreveport) — read the source article.