Financial Empowerment for Non-Traditional Earners

4 minute read

Imagine that you want to learn how to ski. You envision yourself whizzing down mountains, wind whistling in your ears as you pick up speed. When you arrive at your first class, eager to get started, the instructor explains that you’ve signed up for a cross country skiing program, and dives right into the skills you’ll need to master and enjoy the sport.

Freelancers, artists, and gig-economy workers – basically, independent workers who are outside of the traditional workforce and are looking for financial understanding and growth – may feel like downhill skiers in a cross-country class. Certainly, there are ideas and skills to be gained from the multitude of financial experts, money books and podcasts. But the truth is that most financial conversations fail to address the realities that come with living life as a non-traditional earner.

You are likely to have multiple periods of part-time employment or no employment, and spending much of your time looking for that next job with no security or benefits. Your income may be sporadic – earning larger amounts for a few months, followed by lengthy periods without income.

WATCH Your Money Map: Retirement planning for freelances and artists

Miata Edoga, CEO & Founder of Abundance Bound, and Jean Statler, CEO of the Alliance for Lifetime Income, joined Jean Chatzky on Your Money Map to discuss retirement planning for freelancers and artists on November 10, 2021.

Here are three key insights to help navigate the challenges of being an independent worker.

Understand your numbers. Following a non-traditional career path, requires significant clarity with regards to your precise financial starting point.

  • Take the time to establish your current cost of living. This is not a number that should be just estimated. Review at least your last six months of bank and credit card statements to determine your specific expense categories and the average monthly amounts being spent in each one.
  • Create a balance sheet that reflects your current net worth. Itemize the value of each of your assets, along with a list of each of your liabilities (debts).
  • Without the inherent stability of a regular paycheck, it will be critical that you maintain an accurate picture of your financial position, including your overall annual expenses and earnings. Simple financial software is easily available and becomes a valuable tool, allowing you to keep this information up to date and at your fingertips, without requiring hours of valuable time.

When it comes to reviewing your numbers, it’s important to adopt the attitude of a detective, not a judge. Instead of criticizing yourself for past choices, use the information to develop your spending forecast moving forward, prioritizing the value you have placed on freedom and flexibility, over the accumulation of things that are not supporting your independent lifestyle.

Focus on the long term. Don’t allow an increased focus on day-to-day survival eliminate attention to your long-term financial stability. Call it retirement or the next chapter in life, we all eventually get to that place where the paycheck stops coming.

  • Estimate what you’ll need to secure your comfort and lifestyle you want in the coming years. The Alliance for Lifetime Income provides helpful tools, like the (RISE) Score®, that can tell you whether you’re on track with having enough retirement income and how well it will cover at least your basic living expenses. It’s like a credit score for your retirement plan.
  • Make sure you understand powerful retirement vehicles designed for solo entrepreneurs such as SEP IRAs and Solo 401Ks. As someone who will likely experience larger single chunks of income, commit to learning about financial options that can create protected lifetime income, like annuities, that can give you the security and comfort knowing your basic living expenses will always be covered, so you can live the life you want.

Build community. When you’re not a part of the traditional workforce, your community is no longer automatic, so take time to create a network that lasts. The decision to be an independent worker does not mean you have to go it alone. Regardless of where in the country (or world) you’re currently living, it’s not difficult to find robust online communities, specifically designed for individuals building their own businesses and streams of income. Successful independence requires agility and the ability to consistently recognize and capitalize on opportunity. Never underestimate the power that comes from surrounding yourself with guidance, support, and the constant flow of new ideas and inspiration.

The good news is you’re not alone. More and more people are taking that leap of faith and choosing to be independent.  Data from the 11th Annual State of Independence in America shows that as of 2021, there are now 51.1 million independent workers, a staggering 34% increase from the prior year. Respondents to the study cited the need for supplemental income, and the desire “to achieve better work/life balance, find work that interests them more, and discover purposeful work that fits their values” as just some of the reasons for moving away from a dependence on more traditional jobs. 1

As an independent worker, commit to establishing an intentional approach to financial management and to developing a relationship with money that allows you to flourish and live the life you truly want.

1 11th Annual State of Independence in America, Data Highlights & Preview August 2021, MBO Partners

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