India is seeing a steady shift towards the ‘gig economy’, with an increasing workforce of freelancers who prefer to work and earn on their own terms. Freelancing is an excellent way for women to earn money while working from home, with minimal commute and flexible timings.

The flipside of freelancing is that the income is never a steady amount that you’ll receive every month, which can make financial planning challenging. It is important to reiterate here that women have longer lifespans and are more susceptible to medical complications, so planning for the future and for unforeseen emergencies is absolutely necessary.

Here’s how you can create a financial plan if you’re a woman on a variable wage:

Take stock of your current position

In order to plan for the future, you need to be clear about your present. List down your present bank balances, your fixed deposits, your credit cards, bills that you’re yet to pay, money that you’re due to receive, loans that are in your name, property that you own, any investments that you may have made so far and insurance policies that you have taken out in your name. This, of course, is just an indicative list – feel free to add financial details that you may think are necessary and cut out what doesn’t apply to you but make the list.

It is only when you do, that you’ll have a complete idea of the money in your name. This exercise can be overwhelming if you’re doing it for the first time, so if you’re finding it difficult, I’d suggest you spread this exercise over the course of a few days. The more you consolidate information, the more confident you’ll get with handling your finances.

Create savings ‘buckets'

When you’re a freelancer or self-employed, you don’t have the advantage of the pension fund and insurance benefits that your peers who are employed in corporate organizations do.

The good news is that you can customise your savings plan entirely to suit your needs. I’m both self-employed and a freelancer, so what I like to do is to create different ‘buckets’ or categories of savings. I have a ‘retirement’ bucket, where I siphon and invest money for the long term, an ‘emergency’ bucket for unforeseen expenses and a ‘nice things’ bucket, where I save for specific items that are expensive, like a holiday or new furniture.

It’s important to identify categories and separate your savings, so when you do dip into them, the overall structure of your finances is not disturbed. Separating your savings also makes it easy to prioritize where your money needs to go during low income spells and when you receive a windfall, make sure you save more instead of sticking to the usual amount.

Time and money

After you separate your savings, you need to plot them to a timeline. Retirement savings, for example is money that you will need when you’re in your sixties. If you are in your late twenties or early thirties, this is money that should be untouched, accumulated and allowed to grow for the next thirty to forty odd years.

This is also the one bucket that you should contribute to assiduously, even during periods of lower income because this will be your biggest nest-egg. It can be SIPs in Mutual Funds, or a contribution to the National Pension Scheme or through voluntary contributions to a Provident Fund or a combination of all three.

Remember, when you invest for the long term, safety alone isn’t adequate. Your money should be able to grow at a rate that beats price rise over the years.

Emergency buckets, on the other hand, should be money that can be retrieved at any point in time. I’ve found that fixed deposits are the best way to set money aside for this purpose. The moment you save a certain amount, open an FD so that the money is not available in your bank account to spend or tempt you into a purchase, but is handy enough to fulfil your needs during distress.

Don’t forget insurance!

Insurance is a necessity for the woman freelancer and it’s important to have both a life insurance policy as well as a medical insurance policy. You can explore ULIPs as an addition to your portfolio, but know that they come with their own pitfalls.

Freelancing is a convenient way for women to make their own money, but like any other life choice, it comes with its own limitations. Don’t let the unpredictability of income deter you from creating a financial plan. If you’re organised, you’ll be on top.

Rupee Rani is a weekly column on finance for women. Write to us with your queries at rupeerani@thenewsminute.com.