Understand Your Spending: How to Self-Evaluate and Fix Financial Habits

Understand your spending

Gig work is exciting, but it can also come with inconsistent income or the need to drop clients or projects for various reasons. You could see seasonal highs and lows due to your industry, or your own availability could impact what you earn in a year. To maintain the great thing you have going with independent work, it’s important to understand your spending and income. Knowing how much you make and where your money goes is key to stretching it out as long as possible.

Take an Honest Look at What You Spend Each Month

Sometimes reviewing our financial habits is painful. If you hesitate to start, remind yourself of the rewards you will reap when you understand your spending. Using money management app like Billshark or tracking manually are all options to get you started. Regardless of how you choose to track, you need to know how much you spend each month before you can make any improvements. Be sure to include every expense, no matter how small.

Now It’s Time to Categorize Your Expenses

Once you know how much you spend, figure out the percentage of your income that goes to typical categories like rent or mortgage, car payment, insurance, groceries, and other necessities. Although you can’t live without these things, you can find ways to cut back if necessary.

For example, could you clip coupons or buy generic products at the grocery store to save money? Inquire about discounts with your insurance company? The questions and answers will be different for every solo worker, but spending time thinking about it is critical for better money management.

You will probably uncover several non-essential categories on your list too. While you need to get out once in a while, you may find that your entertainment costs are far more than you expected.  Maybe you have a thing for new clothes but could get by with Goodwill fashion until you have more disposable income. The important thing is to commit to setting financial goals using the data in front of you.

Set Limits if You’re Spending Too Much on Unnecessary Things

You work hard and feel like you should have nice things to show for it. That may be true but consider that you will need to work even harder if you get yourself in debt with unnecessary spending. Placing a limit on discretionary spending and including it in your budget is a win-win. You don’t feel like you’re depriving yourself too much while still enjoying the occasional indulgence.

Track Your Financial Progress

Recording your progress towards paying off debt and building more secure income for yourself is rewarding, and you can use whatever works for you to do it. Whether it’s a spreadsheet, financial software, or free tracking offered by your bank or credit card issuer, creating and then meeting your goals helps you more feel secure in today’s gig economy.

When you feel frustrated with the amount of work involved to understand your spending or wish progress were moving faster, remind yourself how far you have already come. It takes a special person to earn or supplement their living with gig work, and you’re nailing it.

About the Authors: Lisa Kroulik has worked as a freelance content marketing writer for 10 years. She loves the work and the lifestyle it affords. Learn more about Lisa’s work and availability through Writer Access.

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