Financial Wellness In The Gig Economy

At the heart of financial wellness is the ability to effectively manage our financial resources and maintain a good level of financial stability and security.
This can be hard to achieve. And in some situations even harder.

A case in point being the gig economy.

Unlike the creator economy where individuals creatively produce and monetize content, the gig economy is primarily serviced based in which individuals provide services on a contract basis.

From experience, there can be an overlap between them in which a person can participate in both economies.

The work in the gig economy is typically short term in nature. A popular example is freelance work.

In this post, we will look at the major unique challenges in this economy towards achieving financial wellness and a possible way to remedy them.

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Unique Challenges

One of the interesting thing about the gig economy is that it can be a double-edged sword and many participants haven't succeeded in being on the other side of the sword(the benefit).

I'm talking about the inconsistent income and cashflow .

Depending on how you frame it, it can be a good thing or bad thing.
When coming from a traditional 9 to 5 job with a steady income, this economy can be a tough place to be because there's little to no regularity on when or how much you get paid.
Incidentally, this is also what draws many people into it.

In that we overestimate how much we can earn while overlooking how hard it will be to achieve that such as the time constraints and fierce competition.

Of course, this doesn't mean one can't steadily earn high but the possibility can be very slim.

The pareto principle comes to mind. 20% of the participants take away 80% of the earnings. Breaking into the 20% is no piece of cake especially when you're a latecomer.

On the same breath is the lack of benefits and job security.

A few years back a case was started on Uber and related companies with gig workers.

The premise was in the classification of these workers.

Are they employees or independent contractors?

In some places Uber and Co. won and in other places the workers won. The case is evolving till to this day.

Labeling workers as independent contractors will mean that no health insurance and retirement plan. No paid time off and leave, a lack of employment protection.

It's not like most of the traditional system excel in these things but it is still a tough situation to be at.

Achieving Financial Wellness

Every so often, the winds of fortune blow our way and we do financially well. For example, signing a big client.

Things are great during those moments but we somehow take them for granted. Until they go away.

Landing a big client doesn't happen every day or week. But when it happens, it can be a good opportunity to double up on achieving financial wellness.

It's no brainer that having a safety net is important in an uncertain economy.

So setting savings goals and prioritizing savings is a better move than falling for the big check syndrome and spending most if not all of that money away.

Another thing is understanding the power of compounding and investing early.

If every big check is correctly utilized and well invested, it's just a matter of time before one builds a good financial cushion.

The same thing more or less can be said on developing multiple income streams and identifying additional gig opportunities.

Due to time constraints, more gig opportunities might not look favourable.

But exploring alternative income sources (e.g., passive income, investments) will definitely be favourable.

In Closing

Behind the inconsistent income in the gig economy is the asymmetrical potential to earn big every so often.

Learning to take good advantage of those moments can aid our direction towards achieving financial wellness.


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