Managing Unpredictable Cash Flow in Personal Finance

The economy is highly complicated. Many people today look for varied ways to earn money. One such way is via what has been called the gig economy. The gig economy consists of specific gigs such as dog walking that a person may choose to engage in part-time or even full-time. A freelancer may have a single part-time gig or have several jobs that allow them to get the income they want in any given time frame. Such gigs have many advantages. Many people are unable to commit to a full-time job because of prior commitments such as childcare or ongoing studies. The changing hours allows them to work when it is convenient for them to do so. However, while these kinds of jobs can be ideal, they can also pose problems.

Unpredictable Cash Flow

One of the biggest problems with a series of gigs is that people may lack a steady income. Unpredictable cash earnings may result in problems such as negative cash flow where the money earned does not cover the person’s expenses. Many people have come up with all sorts of ways to help overcome this problem. Freelancers can look into additional work to earn money in addition to their primary gigs. For example, providing ridesharing services to others in the local area is a flexible way to earn extra income. Instead of looking to earn more, some may decide to look towards small loans to tide them over in between gigs. If one wants to avoid the most notorious forms of short-term lending, looking for an online payday loan alternative is a viable option. Personal installment loans and even personal lines of credit can be useful short term lending solutions to help with cash flow between jobs. Alternatively, taking advantage of credit cards to cover necessary expenses can be a simple solution as well. In any case, it is important to remember that as soon as work resumes and cash is flowing that the income is used to pay back any loans or credit balances to avoid collecting debt.

Managing Finances

Those who choose to freelance need to be more conscious than ever about managing their personal finances. Many people find it important to look for ways to cut down on their expenses and save money. For example, they might opt for a cheaper apartment or a smaller house. They might also opt to rent out one of the rooms in the space for at least a few days a month. This can help any freelancer avoid feeling a financial pinch should it be a slow time for their work opportunities. Any savvy freelancer should also look at their finances carefully. Doing so can help them decide on a budget. A budget should include all the money they typically spend in a given time frame such as a month. It should include basic items such as a rent or mortgage money. It should also include funds used for a food budget and other expenses such as maintaining a car and paying off any student loans.

Dealing With Emergencies

Fiscal emergencies are common. For example, someone or someone they love might have an unexpected health crisis. Medical bills can really add up even if the person has good insurance. In addition, this person may have earned money in the past and help contribute to the household income. Their illness can make it hard for them to work and result in lost household income. This is one of many reasons why anyone who is going to freelance should think about the many ways they can set up an well-funded emergency fund. An emergency fund should include at least enough money to pay their bills for two to three months.