In light of the recent government shutdown, there has been a lot of attention in regards to how missing paychecks impacts the average American. Most Americans don’t have a regular savings account and could not handle a $1,000 emergency, let alone miss practically a month of pay.

While things look positive for the backpay of those government workers, we all could benefit from some careful reflection about the precarious nature of our personal finances.

Particularly those of us who don’t receive a regular paycheck.

Entrepreneurs and those invested in the gig economy have volatile incomes, and literally no promise of a paycheck ever – that can impact your personal finances in a number of ways.

Variable incomes are normal for this group and can impact entrepreneurs in ways as simple as handling debt.

If this is you – here a few things to keep in mind that can help you deal with the volatility of living on a variable income and handling your personal finances.  

• Set up an emergency fund. Start with 500 if you have too, and remember this an emergency fund for your personal expenses, not your business. If you have an emergency fund, make sure you identify what an emergency is and also be prepared to put money back when it comes out. If you have a hard time not spending money in front of you, put your money in a local bank or CU that you don’t have immediate access too.
• Stick to a budget. when you can’t forecast your income appropriately, controlling expenses is so critical it’s the few things that are in your control.
• Don’t mix business with personal. While you may be pouring your personal energy and time into your start up or gig, be careful about mixing expenses for two reasons: First, it messes up your budget. You need to have separate budgets for personal and business. Second, there could be tax challenges – consult a tax professional for more information. Here’s a little primer to get you started.
• Save for retirement. There are tax benefits and come on, don’t wait till you can’t work anymore. Also, an IRA IS NOT AN EMERGENCY FUND.
• Practice good financial behaviors. Automate bill pay. Online statements. Digital receipt tracking. The more you can automate your life, the better you are. You already have so many demands on your time, reduce that so you can spend more time doing what you love and what matters.
• Consider diversifying your income. Either ensure you have multiple strings or a backup gig (even if it’s just uber driving); or be prepared to do temporary or contract labor during your slow seasons.

The path to entrepreneurship is rough. What we can learn from the very struggles of the federal employees and the government shutdown is that if the government can be unstable, those of you who work in the world of startups, gigs, and entrepreneurship, need to be even more on our toes. The “normal recommendation” for saving is 10% of your income, but normal may not be enough for you. Be prepared and save (more).

Disclaimer: I am neither a tax or investment professional. This is personal financial advice and I encourage you to visit a professional if you need more specific plans of action.

Popular grocery app Instacart has been using customers’ tips to pay its guaranteed $10/hour rate to employees, rather than using the tips as, you know, bonus money paid to workers on top of their normal pay. The way that you’d expect something called a “tip” to work.

According to the report, “Instacart confirmed that when its payment algorithm determines a driver should be paid below that guaranteed $10, the company uses the customer’s predelivery, ‘up front’ tip to cover the difference. The ‘up front’ tip is automatically set to 5% on the Instacart app; if the customer removes the tip, and the payout would be below $10, Instacart itself covers the cost.”

In this system, the customer’s tip for the deliverer subsidizes the company’s commitment to its employees. Once the change to the tipping policy was announced in workers began complaining about how it affected their earnings in 2017.

Even though the app’s customers have taken to social media to compare the policy to wage theft, the practice is actually legal. Because Instacart and other apps in the gig economy classify their workers as contractors instead of employees, they do technically still get 100 percent of the tips in their wages (even if the company doesn’t supply the same percentage of the wage they’d give the worker without the customer throwing in).

This kind of payment structure may be familiar to you if you’ve ever working in restaurants, bars, or another establishment that uses subminimum wages.

Sadly, Instacart is not the only grocery app that uses a dodgy tipping system. Shipt, DoorDash, and others have similar tipping policies. And they aren’t interested in changing them after all this week’s backlash.

If you’re concerned about making sure that you’re supporting the contractors for these grocery delivery services, some of the contracted workers have requested that you provide the tip in cash instead of tipping through the app and activating its algorithm.

Everyone knows that it’s important to have that reserve of funds stashed away in case of an emergency or a layoff, but it’s often hard to establish it—especially as a young professional or an entrepreneur. Even more daunting is building that reserve of funds to cope not only with a potential emergency, but a job loss.

If you lose your job, you may be eligible for unemployment benefits from your state — depending on a whole host of factors, including cause of termination and your classification as an employee. Often those state benefits are very limited in either duration or in payment, which doesn’t provide the newly minted job seeker with much in the way of time or funds to keep things afloat while they look for their next job. To offset that limitation, there are private unemployment solutions that do exist, albeit limited in scope.

For years, IncomeAssure, which began in 2011 and was issued by SterlingRisk and backed by Great American Insurance, was the largest private unemployment insurance policy. With about 1,000 active policyholders and over $1 million in claims paid out as of 2016, the policy is no longer accepting new applications for coverage as of late 2018, but is still insuring those with an active policy.

“It has been disappointing that we haven’t been able to find a cost-effective way to get the word out that this exists,” David Sterling, SterlingRisk’s Chairman and CEO, said, speaking to The New York Times in 2016. “It’s also understandable. If nobody is aware that something exists, it’s hard for people to find it if they don’t know to look for it in the first place.

With the closure of IncomeAssure as an avenue for new coverage, SafetyNet is another possibility for private unemployment insurance, depending on where one lives. Presently available in 10 states, SafetyNet provides their policyholders with a one-time lump sum payment between $750 and $9,000, depending on the coverage option selected at the time of inception. The monthly cost of SafetyNet varies by state and protection level, and is far less than the traditional policy that was offered by IncomeAssure, as the payment is correspondingly reduced as well. However, as a lump sum option, the ability to quickly access needed cash is a boon to those who may find themselves in need of it.

As with most insurance plans, there are certain exclusions to the SafetyNet policy. These include:
• A pending job loss that the client was informed of prior to purchasing the coverage, or job loss due to acts of war, criminal misconduct, or nuclear/natural disasters
• Job loss due to quitting or retirement, or are termination for cause, including for poor job performance and improper workplace behavior
• Any job loss within the first 90 days of coverage
• Any disability that starts within the first 6 months of coverage if caused by a pre-existing condition treated in the 6 months prior to coverage
• Any disability that occurs in the first 90 days of coverage, or any disability due to normal pregnancy, alcohol or drug use, or elective surgery
• Normal and routine downtimes and workforce reductions for seasonal and other jobs (like construction) or job loss because the task the employee was hired to do was completed or the time period covered by the employment agreement came to an end.

While no one would argue an insurer’s right to protect itself against issuing a policy to cover employment loss for those who sought to quit, retire, or get fired through poor choices on the job, some of these terms should be a caveat emptor for those who have medical conditions that may extend beyond FMLA coverage or whose workplaces are in areas prone to natural disasters, as neither of those conditions may be covered.

For those who are classified as independent contractors, however, the market for private unemployment insurance remains limited. In most states, independent contractors aren’t eligible for unemployment benefits, and neither IncomeAssure nor SafetyNet extended their protections to that segment of the workforce either.

For independent contractors, facing periods of unemployment is one of the hazards of the role. When such a period comes, the independent contractor should invest the time to review the conditions of the work that they did for their last employer to ensure that they were classified correctly as independent contractors, and weren’t mis-classified employees, who would be then eligible for state unemployment protections. (The IRS has simplified the independent contractor test to three broad factors with 11 conditions: behavioral control, financial control, and type of relationship).

Although the marketplace for private unemployment insurance appears to be limited, it’s worth it to ask your insurance professional of any options that may be available to you in your segment of the workforce as a part of your annual insurance review.