Saving the down payment for a new home is no easy feat. It typically takes years of dedication and strict budgeting to tuck away the funds necessary, no matter what or where you plan to buy. Unfortunately, this goal can be even trickier to reach if you work for yourself.
While the gig economy job structure is ideal for many, it can also create some unique financial challenges. This is particularly true when it comes to saving for things like retirement or a down payment on a mortgage.
This doesn’t mean you’re out of luck if you belong to the ever-growing group of gig economy earners, though (or plan to transition to an independent career in the future). There are a number of key steps you can take to meet your financial goals and stay on track, especially if you will need a down payment for a new home.
Set a Budget
The very first thing any future homebuyer should do -- regardless of their career structure -- is to set a monthly budget. This enables you to determine how much you are capable of putting away, what you can spend, and if you can even cut certain expenses to maximize savings.
If you are a gig economy employee, though, budgets can be tricky. That’s because your income can vary wildly from one month to the next, and you probably don’t have a set pay schedule, either. This makes a strong budget even more important.
Whether you set a savings goal of a set dollar amount or a share of your income (i.e.: putting aside 25% each month), knowing how much you can realistically afford to save is an imperative first step.
Automate the Process
While some self-employed folks may get a regular and reliable paycheck, many in the gig economy get paid on an irregular basis. This can make it challenging, and even confusing, to save.
By automating monthly savings, you can take a hands-off approach that allows you to always meet your goals, regardless of how chaotic the month may get.
Salaried workers can ask their employer to direct some of their paycheck into a savings account. While most gig economy employees don’t have this option, you can still automate the process by scheduling transfers.
You could schedule weekly, bi-weekly, or monthly automatic transfers to savings. If you aren’t sure when you’ll be paid each month, spreading these into multiple small transactions can ease the pinch… and you’ll still meet your overall savings goals.
Stick to Your Goals
The first rule of saving is to pay yourself first. If you’re trying to save a down payment for a home, this practice is even more important.
Stay disciplined and on-track by saving each and every time you get paid for a gig. The moment your deposit hits or you cash that check, transfer a percentage of the funds into savings. By doing so, you’ll minimize the chances that you overspend and miss your savings goal for the month.
Maximize Your Savings
Want to squirrel away as much as possible? Then make sure that your savings work for you by putting funds in an interest-bearing account.
Online banks typically offer rates that are 15-20x higher than savings accounts offered at your local bank. When you’re talking about tens of thousands of dollars saved for a down payment, the interest earned can be significant.
The other perk of an online account? It puts your savings ever-so-slightly out of reach, so you’re less tempted (and able) to spend it.
If you’re a gig employee, you know all about hustling for jobs and clients. If you’re struggling to save a down payment, or just want to meet your goal sooner, you could consider finding ways to earn a bit more.
This might mean taking on an extra job each month or finding a side hustle. Then, you can allocate those funds exclusively into savings -- you’ll have your down payment saved in no time!
There are many benefits to working in the gig economy, including the flexibility and freedom that this lifestyle provides. However if you’re trying to build a down payment for a new home, the fluctuating pay structure involved can make saving more difficult.
By setting specific goals and “paying yourself first,” you can enjoy both the gig life and homeownership, in less time than you think!