7 Best Practices for Managing Multiple Income Sources in the Gig Economy
Being a freelancer means ultimate freedom. One minute, you can work at a quirky art event in a buzzing city, next to or at your home office desk. But with that freedom comes the not-so-glamorous part of freelance and gig work, managing multiple income streams.
With the average freelancer rate varying from £39 to £100 an hour worldwide, managing your finances and income is essential to making this flexible lifestyle viable. But, when you factor in tracking various projects, deadlines, and payments, it can quickly feel overwhelming.
So, how do you stay on top of it all? How do you ensure you’re not missing deadlines or losing track of payments? This guide will walk you through some of the best practices for managing multiple incomes. Let’s get started.
7 Best practices for managing multiple income sources in the gig economy
With different clients and projects, it’s really important to keep your finances in check to communicate clearly, remain compliant and make better decisions. Here’s how.
Set clear financial goals
Setting and tracking financial goals is crucial for any small business or freelancer. Instead of a vague plan where you set your rates depending on the day and hope for the best, you should plan out your income with monthly goals and targets.
Once you’ve set those clear financial goals, you need a way to monitor your progress and make sure you’re staying on track. This is where investing in the right tools can be invaluable. Accounting software will connect to your bank account, help you keep track of your invoices and VAT returns, and allow you to run detailed reports–giving you more control and the ability to plan.
With the right tools, you can easily keep an eye on your earnings and expenses, helping you see if you’re on track to hit your targets. This will help to ensure the longevity of your gig economy business strategy as you map your plan accordingly.
Separate personal and business finances
While it may seem tempting to mix up your personal finances and business finances. Mixing the two can lead to chaos when it’s time to sort out your accounts, and it can really complicate things during tax season when you’ve got to fill out your self-assessment or file your tax return.
To maintain clear boundaries, start by opening a dedicated business bank account. Again, accounting software can be helpful here; combined, they make it easier to track your income and expenses without sifting through your personal transactions.
TIP: According to Business Expert, some of the best bank accounts for freelancers are Tide, Revolut and Wise.
Track your income sources efficiently
When you’re juggling multiple clients, projects and payment methods, keeping tabs on your income streams can get messy fast. But tracking your earnings is absolutely necessary if you want to avoid the stress of missing payments (and make sure you’re getting paid on time).
32% of freelancers, in fact, have suffered delays in payments in the last 12 months. Whether it’s from invoices, bank transfers or PayPal, tracking your income helps you know exactly who’s paid and who still owes you.
To help with this, consider automated billing software. You can set up automatic payment reminders, manage recurring payments and even customise invoices for each client. Plus, with features such as instant access to real-time data and easy reporting, you’ll have a clearer picture of your finances at any moment.
Diversify income streams
One of the best ways to protect yourself from unexpected slowdowns is to diversify where your money is coming from. Freelancers and gig workers who have more than one stream of income are better equipped to handle fluctuations in demand.
Start by exploring related fields that complement your primary gig. For example, if you’re a graphic designer, you might consider offering social media marketing services, branding consultations, or selling design templates online.
By broadening your skill set and service offerings, you can attract a wider range of clients and reduce your dependence on any single source of income. This way, if one source of income dries up, you’ve got backup options.
Additionally, don't overlook the potential of passive income. This type of income allows you to generate revenue by doing the work once and getting paid repeatedly. Whether it’s creating an online course, selling digital products or earning from affiliate marketing, passive income streams can provide a financial cushion.
Build a consistent client base
Having a steady flow of reliable clients means you’re not constantly worrying about where your next paycheck is coming from.
The good thing is that most companies prefer to work on multiple projects with the same group of freelancers to reduce onboarding time and make hybrid teams more efficient.
In fact, 54% of full-time freelancers have done more than one project with the same client over the span of two years. The same study found that this also impacts freelancer behaviour, with 7 out of 10 freelancers now making it their top priority to build lasting relationships with their clients.
To build that consistent client base, focus on delivering top-notch work and keeping your clients happy. Offering incentives such as loyalty discounts, retainer packages or exclusive services can also encourage clients to stick around.
Optimise your time across projects
So, you’ve taken on a new client and now have a multitude of new projects to work on. To make sure you don’t drown in deadlines, you need to prioritise your tasks.
To do so, focus on what's urgent versus what's important. This way, you can keep your clients happy. For instance, if you have a project due tomorrow that requires immediate attention (urgent), tackle that first. On the other hand, if there’s a proposal due next week that could lead to a big contract (important), set aside some time to work on that before the deadline approaches.
TIP: Consider using time-tracking tools such as Toggl or Harvest. These applications let you see where your hours are disappearing to, making it easier to allocate your time wisely.
By grouping similar tasks together, you’ll create a smoother workflow. Remember, the goal here is to keep clients satisfied while leaving a bit of breathing room for yourself.
Stay compliant with tax regulations
After working so hard all year, the last thing you want is to get caught in a sticky situation with the tax man. This could lead to some serious fines that will dip into (if not completely drain) your hard-earned profits.
According to HMRC, failing to comply with tax regulations can result in penalties that escalate quickly. For example, if you miss the deadline for submitting your tax return, you’ll automatically be fined £100. And, if you report the wrong earnings, you could be fined thousands.
Wrapping up
As we've explored throughout this guide, managing multiple income sources as a freelancer is entirely achievable with the right strategies in place. By implementing the best practices we've discussed, you can position yourself not only to survive but to thrive in the gig economy.
The flexibility of freelancing offers unique opportunities for personal and professional growth, allowing you to shape your career according to your passions and goals. So, grab your laptop, take charge of your hustle and enjoy the freedom (working abroad, for example!) that comes with being your own boss.
