Most of us graduate college expecting to land a 9-to-5 job with a monthly paycheck. But the reality of post-college life is much harsher.
Not everyone ends up employed with a permanent position right after college. In fact, more and more millennials are being employed in the so-called “gig economy,” where job positions are temporary. Even highly skilled young people may work as independent contractors or in part-time positions to earn a living.
That means there are now more people who don’t have a fixed monthly income. Regardless, nearly everyone has certain fixed expenses that don’t change on a monthly basis. Namely, these fixed expenses include student loan payments, mortgage or rent, phone bills, internet, and insurance.
Financial experts advise young people to save money for emergencies and retirement, and budget income to invest. The idea of saving and investing is to ensure financial freedom in the future. If you don’t have a fixed line of income, how can you do any of this?
It’s not impossible, but it can be more difficult than if you had a reliable monthly income. Here’s how you should plan for a budget and save money when your monthly income varies:
Reduce Fixed Expenses Wherever Possible
Sure, you can’t actually reduce your mortgage or student loan payments due each month. But there are certain fixed expenses you can cut back on to budget more smartly. For starters, look at your rent if you don’t own a house. If it’s considerably expensive, consider moving to another place that doesn’t cost as much.
Downgrading your living quarters isn’t fun, but it will allow you to save money. When you pay down existing debts and have a savings account, you move closer to becoming a homeowner in the future. That means no more renting.
You could also consider using a bicycle rather than a vehicle to travel short distances. This would depend on your personal needs of course. If you live in a city, you can avoid both car insurance payments and gas money by using public transport. It’s much easier to cycle or use scooters in a city than a car. In the end, you will have extra money for essential fixed expenses.
Have Multiple Savings Accounts
Put the money you save from reducing fixed expenses and start saving. Have separate savings accounts for regular earnings, emergencies, and special preferences like holidays. Keep your money separate so you are not tempted to spend it all in one go.
Invest with the Future in Mind
If you can afford to put aside small amounts like $100 or less, you can start investing it. Consider buying stock and inexpensive treasury securities to invest your money. Financial experts recommend investing at least 10 percent of your income. But this is not possible for freelancers and part-timers.
It’s perfectly fine if you invest less than 10 percent as recommended. The point is to start investing so your money can grow over the years.
Don’t expect it to be easy to follow a sensible budget and secure your future finances when you don’t earn a monthly paycheck. But that’s not an excuse to spend freely either. Use the above suggestions to start saving and strategizing as a non-fixed income earner.