As a gig worker, managing cash flow is crucial to your financial stability and success. Cash flow refers to the difference between the money you bring in and the money you spend. When you're a gig worker, you don't have the luxury of a steady paycheck, and your income can be unpredictable. This makes it even more important to keep a close eye on your cash flow to ensure you have enough money coming in to cover your expenses.

For independent workers, cash flow management can be a tightrope walk. Irregular income, delayed payments, and fluctuating expenses can turn what should be a steady stream into an unpredictable roller coaster that makes it hard to plan effectively.

It’s a main root cause for people abandoning independent work, but with the right approach and toolset, you can avoid common pitfalls when managing cash.

Calculating cash flow

Cash flow is simply revenue minus expenses over some period, typically monthly. It gets more complicated as you break down your expenses, especially things like taxes, and map the timing and estimate of what you spend on your business.

The simplest way to manage your cash flow calculation is leveraging an automated tool like Mymo. When you link the accounts you use for your business, Mymo automatically starts tracking your inflows and outflow in real-time, estimates your tax liability, and even shows you expected future bills and expenses, so you have a full picture of what’s going on in your finances at any given moment.

Managing cash flow effectively

Managing cash flow is also important because it can help you avoid debt and financial stress. When you're a gig worker, you may not have access to traditional employer-sponsored benefits like health insurance or retirement plans. This means you'll need to budget for these expenses on your own. By keeping a close eye on your cash flow, you can ensure you have enough money set aside for these expenses, and avoid going into debt. Additionally, managing cash flow can help you build an emergency fund, which is essential for gig workers who may face uncertainty and unpredictability in their income.

1. Automate money movements: Money not in your checking account can’t be spent as easily, so for things like quarterly tax payments, savings, and fixed costs, consider creating multiple accounts that can hold funds for those purposes. You can then set rules in your banking apps to move money automatically at a regular cadence to those accounts.
2. Plan for lean periods: Your income will fluctuate for a number of reasons, but you can anticipate and prepare for slower months to budget accordingly. This includes not overspending in your positive cash flow months, as well as ensuring your backup cash is in a savings account or some other liquid asset that’s quickly and easily accessible.
3. Diversify income sources: Many independent workers have figured this one out, but one strategy is to diversify your income sources, and maintain status or accounts on multiple platforms. If you’re an Uber driver, get setup on DoorDash or Amazon Flex. If you’re a graphic designer, build a profile on Upwork as well as 99 Designs or Gumroad.

The bottom line

Maintaining a positive net cash flow is crucial to having a sustainable independent business. You might get recommendations to do strict budgeting and watch every dollar. We generally don’t recommend this unless it has really worked for you in the past. Most budgeting exercises and apps go unused after the first month because your detailed expenses can change so much from month-to-month that setting specific targets for each category and expense type is nearly impossible to manage.

The most important number is your Net Cash Flow, and whether that number is positive. Do you bring in more than goes out? If the answer to that is yes, then you’ve got something to build on.