With many freelancers and gig economy workers increasingly at risk of their own financial edge, strategies to budget and save are critical to their security. Financial advisor Christopher Haigh recommends a proactive approach to managing finances, emphasizing the importance of creating a solid foundation for both short and long-term financial health. Friedman wholeheartedly advises freelance or gig workers to have a six-plus month cushion of basic living expenses saved up. By comparison, W-2 employees only need to save enough for three months of expenses.
Further, Haigh emphasizes the importance of assessing individual costs by looking at an average of the past three months of spending. This reflection helps individuals understand where their money goes and what adjustments are necessary. He lays out an effective bucket strategy with income broken down into three different categories. This method covers all fixed and variable costs, but enables building savings and spending funds for discretionary purchases as well.
Haigh’s bucket strategy says to spend 50% to 60% of your income on needs. This includes basic living expenses such as rent, groceries, and transit. Next, he recommends about 10% to 15% for short-term savings, which can help pay for emergencies or annual fees like taxes. He suggests allocating 10% to 15% of your budget for fun stuff and discretionary spending. Set aside 5% to 10% for long-term savings and investments. People need to be personally accountable for their tax obligations. To get ready, LLCs ought to put 10% to 20% of their income into savings for future tax payments.
Haigh wants to make sure people understand how important an emergency fund is, especially for people living paycheck to paycheck. “Budgeting for freelancers and gig workers shouldn’t be about rationing pennies or envelope systems. It should be about building a system that absorbs volatility,” he states. This method provides people the ability to better handle erratic income without losing their sense of financial stability.
In cases where saving several months of expenses seems unfeasible, Haigh suggests exploring options to increase income as a priority. A predictable paycheck is better than a flawless spending plan, he says. He challenges readers to think about ways they can grow their income sources first—before getting into the weeds of savings tactics.
For freelancers and gig workers who earn very little, Haigh suggests using simple short-term buckets. With this more straightforward way of doing things, they are able to keep their budgets in check without going crazy. He recommends that you moonlight or have a side hustle or portfolio career. This strategy can help reduce financial burden and establish a more predictable revenue stream.
“Every time you make a dollar, it should be allocated to particular buckets no matter what,” Haigh advises. This practice fosters discipline in spending, helps avoid cost overruns, and makes sure that every dollar is doing the most work possible toward achieving financial goals.
Haigh appreciates the value of building positive habits early in your career. These small habits will help set you on a path to achieving your long-term financial goals. Even in the face of erratic earnings, he thinks people can develop long-term budgeting approaches that will serve them well. He encourages everyone to “stop guessing and start planning with real numbers” once they fully understand their expenditure patterns.
His budgeting philosophy continues to be a departure from usual tiered budgeting approaches that designate specific dollar amounts to different expenditure categories. Instead, Haigh’s flexible framework allows individuals to adjust based on their actual income and expenses, adapting to changes in their financial situations.