Being an independent worker has its benefits, but it also requires you to be responsible for your own finances. To help you get started, here are 10 tips to help you manage your finances as an independent worker.
1. Track Spending: Keeping a close eye on your spending is crucial. By tracking your spending, you can identify areas where you can cut back and allocate your money more effectively. Use a budgeting app or spreadsheet to track your expenses.
2. Create a budget: Make a list of all your income and expenses and allocate your money in a way that works best for you.
3. High-yield savings: Stashing your money in a high-yield savings account can help you earn more interest on your savings. Look for a savings account with a high interest rate and low fees.
4. Invest: A great way to grow your wealth over time. Consider investing in bonds, or mutual funds to start — they’re passive and relatively less risky. If you have the risk tolerance and time, move on to more sophisticated assets like stocks or crypto over time.
5. Retirement Account: Setting up a retirement account is important for ensuring that you have enough money to live on in your golden years. Consider setting up a retirement account, like an IRA or 401(k) (in the USA) or a Pag-IBIG Fund (Philppines) to receive a monthly pension upon reaching the retirement age of 60.
6. Pay Debt & Taxes: Before spending on any luxuries, remember to pay off your debts, so they don’t compound over time. Also, as an independent worker, you are responsible for paying your own taxes. Consider setting aside money each month to cover your tax bill.
7. Get a Credit Card to Build Credit: Building a good credit score is important for many reasons, including getting a loan or a mortgage. Consider getting a credit card to build your credit score, but be sure to use it responsibly.
8. Get a Rewards Card When Eligible: If you have a good credit score, consider getting a rewards card. Rewards cards can help you earn points or cash back on purchases. Just be sure to pay off your balance in full each month to avoid paying interest.
9. Pay Your Own Expenses: Independent workers are responsible for paying their own expenses, so it's important to have a solid financial plan in place. Prioritize paying off debt and make a plan to pay your bills on time.
10. Build different sources of income: Having multiple sources of income can help you stay financially secure. Consider starting a side business or pile on more freelance gigs to supplement your income.
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Parallax's goal is to provide these workers with access to financial products and education that will help them make informed decisions about their money.
So, whether you're a freelancer, an entrepreneur, or a remote worker, Parallax is here to help you get paid what you're worth and manage your finances.
By following the tips outlined in this article, you can take control of your money and build a bright financial future.
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Whether you need help tracking your spending, investing, or building different sources of income, the Parallax community is here to help.