With the advent of the gig economy, modern-day professionals are seeking newer ways to advance their careers. Many people have opted to go freelance or remain self-employed by seeking independent corporate projects. Even though working as a freelancer gives you better control over your hours, it can lead to financial insecurity. You only earn on the days you work and on days that you are sick or don’t have any project in your kitty – you don’t earn anything.

Experts say that an irregular income doesn’t necessarily mean financial instability. Even with an irregular income, if you manage your finances well, it is possible to build a personal line of credit.

Let’s have a look at how you can go about it despite having an irregular source of income:

Diversify your investment portfolio across asset classes. Invest in equity, gold, debt, cash equivalents, fixed income securities, etc. Choose according to your risk-taking capacity and educate yourself about the different instruments of investment. Even after creating an emergency fund, it is essential not to put all your eggs in one basket. Diversifying investments is also helpful in achieving your long-term and short-term financial goals.

1. Create a Robust Emergency Fund – When you have an irregular income, it is imperative to create an emergency fund that you can use if you face unexpected emergencies.Having a personal line of credit gives you the flexibility to withdraw the amount you need. It is helpful for all kinds of financial needs. It could be expenditure for a medical emergency or some urgent repairs. Whenever you are earning well, keep some savings aside in a liquid fund or savings bank account. Usually, it is good to have an emergency fund equivalent to fifty to a hundred percent of your average annual income.
    
2. Plan a Budget Using Your Average Income and For Monthly Expense – Calculate a projected monthly income for the next two years and define a budget according to your earning. Then, plan your expenses every month. Account for everything, including grocery bills, phone bills, and expenditure for leisure when planning your payments. Doing this will help you arrive at a budget beyond which you cannot spend. It will help you set realistic financial goals and work towards achieving them. If you find that your income does not cover your expenses, you should try to find a second sourceof income.
    
3. Start a SIP or Make Lumpsum Investments – SIPs or systematic investment plans offer the benefit of compounding. You can open a SIP for a small amount and bring discipline into your financial life. Money automatically gets deducted from your bank account and directed to the mutual fund you invest in. Another good option is to make a lumpsum investment every time you have surplus income. Making strategic investments now and then helps your wealth grow steadily and builds a corpus of funds.
    
4. Insurance – An essential step towards stabilizing your finances against an uncertain income is to buy insurance at the earliest. Investing in a good life insurance and health insurance plan offers your family and you a safety net in case of emergencies. Insurance companies offer different term plans and family floater insurance plans to suit your needs. Make sure to compare the quotes from other companies and read the fine print carefully before buying.
    
5. A Second Source of Income – Building a second source of income is a wise decision to establish financial stability in the face of an irregular income. An emergency fund may tide you over a few months of low income or in case of unforeseen expenses. But a secondary income can insure you against any financial insecurity. Just like it is essential to diversify your investments, it is also necessary to diversify your line of credit.
    
6. Asset Allocation in Your Portfolio

Freelancing or having your own business has its pros and cons. Undoubtedly, being a part of the gig economy offers a better quality of life, but it can be economically rewarding with proper financial planning. You can continue to save, invest and channel your hard-earned money for a better future even with an irregular income. It is always helpful to consult a financial advisor who can keep you updated about the on-goings of financial markets and chart out your personal financial goals as you move forward in life.

Author Bio:Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India's first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters, and when they want to get a loan. He has made it his life's mission to help and educate people on various financial topics, so email him your questions at shiv@freo.money.