How to budget in the gig economy
No matter what you do for a living, knowing how to budget can help you keep track of your expenses and control your spending. But for gig workers, who may receive irregular or infrequent payments, it may be even more vital to understand how to budget well.
How we define a gig worker
A gig worker earns income through activities outside of a standard, long-term employer-employee relationship. This type of self-employed worker performs temporary jobs typically as an independent contractor or freelancer. They often do short-term work and may do it for multiple clients by the project, hour, day, week or another arrangement. This arrangement can lead to paychecks coming from a lot of sources.
How frequently are gig workers paid?
Gig workers can be paid in any number of ways. They might be paid on a standard schedule, which could be biweekly, semi-monthly or monthly. Or they could also be paid based on an invoicing arrangement. They might even be paid daily.
Standard pay schedules
Biweekly, semimonthly and monthly pay schedules are the most common found in the workplace, whether as a full-time employee or a gig worker. Here’s how they differ.
- With a biweekly schedule, employees are paid every other week, usually on a set day, for a total of 26 paychecks per year.
- With a semi-monthly pay schedule, employees are paid twice a month on a set date, often on or around the 15th and the 30th — with modifications for February — for a total of 24 paychecks a year.
- A monthly payroll schedule means that employees will receive a paycheck once per month, usually on the last day of the month, for a total of 12 paychecks in a year.
The complexity comes in when a gig worker is paid by several sources that use different pay schedules, making it difficult to budget.
What to include in a budget
Monthly budgeting can be a good way to manage an irregular income. Something gig workers can consider when they budget is separating their needs from their wants and making sure they start the month with enough to cover their recurring needs for a full 30 days. Some needs include:
- Housing such as mortgage or rent
- Insurance including health and auto
- Utilities like electricity and water
- Essentials like groceries and toiletries
- Transportation like a car payment or train pass
- Loan payments
- Communications like cell phones and internet
How to budget
Knowing how to create a budget helps you to plan how much you’ll be spending or saving each month, as well as help you track your spending habits. Over the long term, budgeting can help you save money. To budget, start by:
- Assessing your situation and take a look at the money that comes in and goes out in a given month.
- Prioritizing your spending and determine your needs and wants.
- Creating a budget by monitoring your regular expenses and tracking your monthly spending with a budget worksheet.
- Staying on track by keeping tabs on your spending and adjusting your budget as your circumstances change.
Learn more about the benefits of budgeting. If you have a Chase checking account and an eligible Chase credit card, check out the Chase Mobile® app budget feature to help craft a plan that matches your needs.