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3 Mental Shifts You Need to Make to Build a Stable Financial Future in the Gig Economy Draw up plans on your future finances, with the goal of becoming independent, freeing yourself from debt and putting away savings for your future.

By Andrew Medal Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

JGI | Jamie Grill | Getty Images

The gig economy has become a massive industry. Uber, the oft-cited mover and shaker of the gig economy, is now valued at $62 billion, TechCrunch reported. It's even rumored to being going public next year.

Related: Don't Sell Yourself Short in the Gig Economy

No doubt the company has to be grateful to the millions of drivers who choose to participate in the platform. In the United States alone, there are 1.5 million drivers sharing their rides.

And it isn't just Uber that's driving the gig economy. A host of other services are tapping into the freelance workforce, as well. A study by Upwork revealed that 57.3 million people worked freelance in 2017, contributing $1.4 trillion to the economy. The workforce is also shifting, because more workers are starting to prefer freelancing to traditional employment arrangements.

Freelancing has become a huge draw, especially for younger workers, with perks like flexibility and uncapped earning potential. Workers can definitely make a nice sum of cash maximizing the opportunities these platforms provide, especially if those workers possess in-demand skills and show that they can work hard.

There are, however, certain trade-offs. To start, there's the issue of job security. Even if gigs seem plentiful, there still are chances of lean periods for certain types of work. The tech game is also quite fickle. You don't know how long these platforms will remain sustainable or when they may pivot from their current ways of doing things.

Uber's sudden exit from Southeast Asia, Bloomberg reported, affected not only the regional ride-sharing market but the lives of its drivers as well.

In addition, regulations are still quite muddy about how freelancers are classified. Some geographic areas have already ruled that gig economy workers should be considered employees, but many countries still consider them self-employed. As such, typical employer-provided benefits, like pensions, insurance, days off and healthcare need to be shouldered by freelancers on their own. These perks are important because they are worth tens of thousands of dollars in the course of someone's employment.

Related: 7 Reasons Why the Gig Economy is a Net Positive

That's why, if you're part of the gig economy, you must be mindful about long-term financial stability. Even with traditional employment, it isn't easy to save for the future these days. Freelancers face an even more uphill battle -- a challenge but not an impossible one, given the tech-driven tools available to help people invest and save. Here are three ways to build up your finances as a member of the gig economy workforce.

Plan for retirement.

Payouts from gigs may be good enough to earn you a decent living today, but you need to put away part of it for your future. Life expectancy is increasing (as documented by the World Health Organization). So if you want to retire in your 60s, you should save enough to sustain you for about two more decades of living, especially if you are in a country with excellent healthcare.

Pensions have typically been the way to go about retirement planning: You contribute a portion of your income while working and you're set to receive monthly payouts when you retire. But even if you have access to these plans, they seem to have fallen out of favor these days; and most freelancers and contractors lack easy access to them.

Fortunately, the blockchain-based pensions platform Akropolis aims to make sustainable and secure pensions available to freelancers and gig economy workers. Through pension platforms like this one, you can shop around for a product that fits your financial goals. You can also track the progress of your contributions, thanks to the transparent record-keeping blockchain provides.

The platform further engages vetted funds and fund managers, which ensures that entities vetting your money are legitimate.

Nor are pensions the only way to save for the long haul. You can also shore up your assets and diversify your portfolio by putting money into mutual funds, stocks, insurance and even cryptocurrencies. If you have little to no idea how to start investing, you can try out robo-advisor apps like Wealthfront and Betterment, which will help you find easy ways to start investing.

Manage debt wisely.

Financial stability can be hard to achieve if you're in the red. If you're like the typical young gig economy worker, you're likely dealing with a sizable student debt. In 2016, the average student loan debt amounted to over $37,000, the Wall Street Journal reported.

Conventional financial wisdom has it that clearing your debts is often the first step toward financial wellness. However, for most, this becomes a question of priorities. If you've had a good month from your gigs, don't rush to reward yourself with some pointless or fleeting expense. Instead, use an app like Mint to keep track of your cash flow. Mint can help you track your income and set budgets for your usual expenses, like bills and groceries. Consider whittling away your remaining loan balances with the extra money that you earn.

If pressed to choose between putting in money for your retirement or paying extra to service your debt, it's advisable to prioritize your retirement fund (as Time magazine has written). The reason is that contributions carry tax incentives. Funds could also have gains that are higher than your student loan interest, which would make you better off in the long run.

Just make sure you make your monthly payments to your student loan. Keeping your debt manageable will at least stop you from hemorrhaging money from unnecessary interest.

Be your own boss.

Stop thinking of the gig economy as something to tide you over, as your "side hustle" or as a chill way to earn a living. Maximize every opportunity to earn through these platforms, but also think of the long term. While some may argue that working in the gig economy is like entrepreneurship, participating in centralized platforms means you're still working for large corporations.

So, work on transitioning to real business ownership versus gig employment. You're more than halfway there anyway. Specifically, you're already the one in charge of your operating expenses and your equipment. And by participating in platforms, you may have gained access to ready customers and the automated tools you'll need to manage things like invoicing and collections.

Business processes can easily be dealt with, using technology. Services like QuickBooks and Xero can help you manage your books and numbers. Why not work on making the platform you choose relevant for your own context? Take advantage of the opportunity to network with your customers. Get to know them. Building relationships will make it easy for you to take them with you when you eventually leave to run your own outfit.

See gig work as a means to an end.

Financial stability requires serious planning on your part. Start by overcoming the mentality that gigs and freelance work are a more relaxed way to earn money.

Related: The Gig Economy Is Reinventing the Enterprise -- Don't Get Left Behind

Alternately, take advantage of the flexibility that gig work brings, to develop yourself and build toward something greater. Always keep in mind that rainy days will come, and that you're aging. That's why being wise with money should start sooner rather than later. Draw up plans on how you'll manage your finances, with the goal of becoming independent, freeing yourself from the clutches of debt and putting away savings for your future.

Andrew Medal

Entrepreneur & Angel Investor

Andrew Medal is the founder of The Paper Chase, which is a bi-weekly newsletter. He is an entrepreneur and angel investor.

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