The world is changing quickly, and it’s time for financial planning advice to catch up. With the gig economy and new technology, you can diversify income, build wealth, and gain control over your finances.
The world is changing quickly, and it’s time for financial planning advice to catch up.
It’s no longer commonplace to work at one company for your entire career and walk away with a nice pension to help you live a comfortable life in retirement. New technology combined with a surge in freelancing and the on-demand gig economy means many people no longer rely solely on their 9-to-5 income. Though in some ways this may complicate your financial plans, it also brings new opportunities to build wealth, diversify income streams and gain control over your finances.
Whether your goal is to start a family or start a business, you can take advantage of employment flexibility and financial planning tips for today’s economy to gain financial freedom and meet your goals more quickly.
1 Live Beneath Your Means
This old adage is still one of the most important building blocks to financial success, but many people don’t actually follow it. Start by looking at what your lifestyle costs you. Do you need $3,000 per month to live on? $5,000? $10,000? Once you identify what your expenses are, examine what you can eliminate to live beneath your means. Maybe you can:
Switch to generic products.
Reduce expenditures on luxury items like beauty salons or gadgets.
Use public transportation to save on gas.
Go out to dinner less frequently.
Make lunch and coffee at home.
Mastering this principle of living beneath your means will keep you organized with your finances and on track with your goals. It will help create a solid foundation to achieve financial freedom.
2 Start a ‘Side Hustle’
It’s time to turn the old “save, save, save” mentality into an “earn, earn, save” mentality. You should still try to live below your means, but once you understand how much you need to cover your basic living expenses, focus your attention on how you can generate extra income. In addition to your regular job, find a side gig that brings in more money. Anything you earn above your monthly cost-of-living target frees up more capital to accomplish your goals.
With an array of new startups, almost anyone can set up a side hustle. You could drive for Uber or Lyft on nights and weekends or rent a spare room in your home or apartment on Airbnb. If you have a talent such as website editing, graphic design, writing or house painting, you can put your skills to use and make extra money through websites like Upwork or TaskRabbit. The opportunities abound; you just need to have a burning desire to achieve your goals — and a willingness to put in the extra work.
3 Save to Invest, Not to Save
Initially you can save your side-hustle dollars in a separate, high-yield online savings account (some accounts pay around 1% per year). Set up direct deposit so that all of your side-hustle money goes straight into that account. As you start saving up this extra income, you’ll soon realize that you can start investing this money in your future. You’ll have a nice chunk of change ready to use, giving you more options to develop additional income streams like rental income or starting a business.
For example, let’s say you want to start investing in real estate and you need $20,000 of seed money. If you are able to set aside $300 each week from a side hustle and living beneath your means, you could save your goal amount in less than 18 months. Using that money to invest in a rental property that will continue to pay you income means you are setting up a stream of passive income, in addition to your regular paycheck.
4 Financial Flexibility
When you have multiple sources of income, you really begin to gain control of your financial situation. It gives you more options and allows you to reach your financial goals faster. Of course, in order to get there, you have to put in the extra effort now so that you can enjoy more financial freedom and flexibility later.
As the economy and our careers evolve, it’s important that financial advice and goals do, too. Thanks to new technology, the rise of the on-demand gig economy, and financial planning advice re-envisioned for today’s opportunities, you can begin investing in your future to diversify your income stream and rely less on your 9-to-5 salary alone.
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Frequently Asked Questions
Why does financial planning need to change in the 21st century?
It’s no longer commonplace to work at one company for your entire career and walk away with a nice pension. New technology combined with a surge in freelancing and the on-demand gig economy means many people no longer rely solely on their 9-to-5 income. While this may complicate your plans, it also brings new opportunities to build wealth, diversify income streams, and gain control over your finances.
What does it mean to live beneath your means?
It means spending less than you earn. Start by looking at what your lifestyle costs each month, then examine what you can eliminate. You might switch to generic products, reduce spending on luxury items like beauty salons or gadgets, use public transportation to save on gas, go out to dinner less frequently, and make lunch and coffee at home. This keeps you organized and creates a solid foundation for financial freedom.
What is a side hustle and how can I start one?
A side hustle is a side gig that brings in extra income beyond your regular job. With an array of new startups, almost anyone can set one up. You could drive for Uber or Lyft on nights and weekends or rent a spare room on Airbnb. If you have a talent like website editing, graphic design, writing, or house painting, you can make extra money through websites like Upwork or TaskRabbit.
What does ‘save to invest, not to save’ mean?
It means treating your savings as seed money for investments rather than letting it sit idle. Initially you can save side-hustle dollars in a separate high-yield online savings account and set up direct deposit. As that extra income grows, you can invest it in your future, giving you more options to develop additional income streams like rental income or starting a business.
How long would it take to save $20,000 for real estate?
The article gives an example: if you want $20,000 of seed money to start investing in real estate and you set aside $300 each week from a side hustle while living beneath your means, you could save that goal amount in less than 18 months. Using it to buy a rental property sets up a stream of passive income on top of your regular paycheck.
Financial Planning for the 21st Century (by NerdWallet) page context
Financial Planning for the 21st Century (by NerdWallet) is a Billshark page. It can help you with your bills and your choices, and it can show you how to save.
Modern financial planning for the gig economy: live beneath your means, start a side hustle, and save to invest. Build wealth and income streams today.
Use this page to learn about Billshark. Then go to the part of the site that fits what you need. Small steps add up. You can save a lot over time.
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The links on this page help you weigh your choices. They also help you see what you pay and what to do next. You can save a lot over time.
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We link the small choices you make each day to the big picture. That means your budget and what you spend at home. We make it easy for you.
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Our pages link to each other. That way, you can find more help and still keep track of what you came for. We are here to help. It only takes a few minutes.
This page makes it easy to find the key facts first. Then you can pick a plan or make a change with less stress. Small steps add up. You can save a lot over time.
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Our other pages explain the words you see on a bill. They also help you weigh the pros and cons of each plan. You can save a lot over time. We make it easy for you.
Our tips focus on real choices you can make. Start with the basics, then read a more detailed guide if you need one. Ask us if you get stuck. Read on to learn more.
This page is one of many that we share. Together they cover home costs, the firms you pay, and how to get help. You are in the right place. It is free to read.
Take your time and read this page first. It helps you see your choices and find out what to read next. We make it easy for you. We are here to help. It only takes a few minutes.
We set this page up so you can compare and keep reading. You will not need to hunt for what you want. Read on to learn more. Small steps add up. You can save a lot over time.
Monthly bills come with rules, terms, and fine print. This page helps you find the parts that count for you. It is free to read. Keep this page handy. Ask us if you get stuck.
Our pages give you a clear view of what you pay each month. You can then pick the plan or guide you want. We are here to help. It only takes a few minutes.
Some of our guides cover the basics. Others go into detail on one company or one type of bill. Small steps add up. You can save a lot over time. We make it easy for you.
It pays to read first and act later. This page links you to the next guide if you want to learn more. Keep this page handy. Ask us if you get stuck.
We share guides that help you make sense of your bills. They show your choices and the best next step. It only takes a few minutes. You are in the right place.
Want more detail on a bill, a plan, or your account? Check this page against the links we share here. You can save a lot over time. We make it easy for you.
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This page is part of our help library. It gives you clear facts and links so you can keep on reading. We make it easy for you. We are here to help.
Your needs can change, so come back any time. Our other pages can help you look into a new cost or plan. Read on to learn more. Small steps add up. You can save a lot over time.
We laid out this page to help you get the facts and compare them. You can then choose your next step with ease. It is free to read. Keep this page handy.
The world is changing quickly, and it’s time for financial planning advice to catch up.
By Anna Sergunina and featured on NerdWallet.
Learn more about Anna on NerdWallet’s Ask An Advisor.
It’s no longer commonplace to work at one company for your entire career and walk away with a nice pension to help you live a comfortable life in retirement.
Whether your goal is to start a family or start a business.
This old adage is still one of the most important building blocks to financial success, but many people don’t actually follow it.
Mastering this principle of living beneath your means will keep you organized with your finances and on track with your goals.
It’s time to turn the old “save, save, save” mentality into an “earn, earn, save” mentality.
With an array of new startups, almost anyone can set up a side hustle.
Initially you can save your side-hustle dollars in a separate, high-yield online savings account (some accounts pay around 1% per year).
For example, let’s say you want to start investing in real estate and you need $20,000 of seed money.
When you have multiple sources of income, you really begin to gain control of your financial situation.
As the economy and our careers evolve, it’s important that financial advice and goals do, too.
Anna Sergunina is an hourly, fee-only financial planner, the president of MainStreet Financial Planning and the creator of Money Library .
The article Financial Planning for the 21st Century originally appeared on NerdWallet .
