Posted By 
By Devin Partida
Special to Financial Independence Hub
Freelancers are growing in abundance. The gig economy benefits from the rise of digital platforms connecting workers to customers for short-term employment. While the whole setup affords freedom and flexibility for many, it also comes with financial uncertainty.
Unlike traditional employees, gig workers don’t have a steady paycheck that comes through from month to month. There are also no work benefits nor guaranteed work hours. The unpredictability of gigs can make it difficult for people in the industry to save and build an emergency fund.
Why Gig Workers need an Emergency Fund more than ever
An emergency fund is any gig worker’s safety net. Your unique circumstance as a freelance worker makes income inconsistent and paid sick leave non-existent. This lack of employer-sponsored benefits necessitates creating your own cushions. However, financial planning is even more challenging as a gig worker : medical emergencies, vehicle breakdowns or slow business months can become financial disasters without proper savings.
Building an emergency fund ensures you’ll be prepared when income dips or unexpected expenses arise.
Smart Saving Strategies for Gig Workers
It’s challenging, sure, but that doesn’t mean it’s impossible. Here are ways to help you start your savings journey:
Automate Your Savings From Gig Payments
Every time you receive your paycheck, set up an automatic transfer to a high-yield savings account. Some banks allow their users to automate transfers so they can set aside a portion of every deposit. If your bank doesn’t, you can do the same with apps like Digit, Qapital or Chime.
Automating your savings allows you to set it up once and forget you’re actively saving in an emergency fund. Even 5% to 10% of each payment can add up to a significant amount over time.
Use High-Yield Savings Accounts
Keep your emergency funds in a savings account with high returns rather than a checking account that pays very little interest. A high-yield savings account is an accessible and secure place to save your emergency stash. You’ll earn competitive interest while the money is idle and can withdraw cash whenever needed. Many online banks offer this benefit so you can grow your savings.
One word of caution, though: You should not put all your money in one high-yield savings account. Diversifying them creates better financial resilience.
Implement the “Pay Yourself First” Strategy
Robert Kiyosaki popularized the “pay yourself first” scheme. This method means prioritizing your saving goals before your expenses. If you treat your savings like a monthly nonnegotiable expense, you ensure you funnel some money toward financial security over discretionary spending.
Budget Based on your Lowest Income Month
Because gig work is unpredictable, you should budget every month as if it’s slow. Calculate your lowest earning month and structure your essential expenses accordingly. Put any excess in your savings fund.
Cut Unnecessary Expenses and Redirect to Savings
Do you eat out more often than you should, or buy new clothes you don’t always wear? Are you being tempted to swipe your credit card for every purchase? Assess areas in your life where you most indulge in spending money.
Knowing where your money goes can reduce shelling out where you don’t need it. Cancel unused subscriptions and opt for public transportation rather than Uber to your location. Cook at home instead of dining out and take advantage of discounts and cashback rewards. Every dollar saved can go toward building your financial cushion.
Leverage Microinvesting Apps for Small Gains
Microinvesting allows you to start saving with minimal capital, often investing spare change from day-to-day purchases. Apps like Acorns and Stash round up your purchases and invest the spare change. While not suitable as a primary emergency fund, these microinvestments are perfect for beginners and those with limited funds to supplement their savings over time.
Diversify your Income Streams
Decrease your financial vulnerability by tapping into multiple income sources. Consider taking on different types of gigs to ensure a steady flow of earnings. Whether freelancing, online tutoring or renting out a spare room, extra income streams can help you save more consistently.
Create a Tiered Emergency Fund Plan
The best way to handle any emergency is to build a ready fund. However, establishing an emergency fund takes time. Breaking them into achievable milestones can help you get there without the pressure.
- $100: A small but essential cushion for minor emergencies.
- $500: Covers unexpected car repairs or medical expenses.
- $1,000: A strong safety net for short-term setbacks.
- Three to six months of expenses: Offers proper financial security in case of prolonged income loss.
Prepare for Medical Expenses
One of the biggest challenges for gig workers is the lack of company-sponsored insurance. Without coverage, an unexpected illness or injury can drain your savings. To avoid this situation, look into affordable healthcare options.
- Marketplace health plans via Healthcare.gov
- Health-sharing programs
- High-deductible health plans with Health Savings Accounts (HSA)
- Discount programs for prescription medications
The health insurance marketplace covers prescription drugs, emergency services and mental health disorder services. Having a dedicated health savings account can prevent medical costs from depleting your emergency fund and forcing you to start over.
Protect yourself with Disability and Liability Insurance
Depending on the nature of your job, an injury could leave you in financial turmoil, which could affect your income stream. Consider purchasing disability insurance to replace lost wages if you can’t work. Liability insurance is essential for gig workers in ridesharing, delivery or event planning.
Build a Slow-Season Fund
Seasonal demand fluctuations are natural for gig workers. If your income drops during specific months, set aside money during peak seasons to cover expenses when work slows down.
Turn your Irregular Income into Reliable Security
Saving is essential to any working adult, regardless of the job. However, with the unpredictable nature of freelancing, those in the gig economy are positioned more unfavorably since they don’t have benefits to lean on during rainy days. Emergency savings are an invaluable lifeline for gig workers. Start today: even if it’s just setting aside a few dollars from your next gig payment. Your future self will thank you.
Devin Partida is the Editor-in-Chief of ReHack.com, and a personal finance writer. Though she is interested in all kinds of topics, she has steadily increased her knowledge of the intersection of finance and technology. Devin’s work has been featured on Entrepreneur, Due and Nasdaq.
