A guide to thriving financially in the gig economy
Are you considering becoming a gig worker, or just started out as one? Read our guide to thriving financially.
The average gig worker based in the United States makes around $69,000 a year – which is more than the median salary of $59,000. Additionally, over 60% of gig workers say their flexible work schedule is more important to them than a higher salary.
Offering greater flexibility and control over your daily schedule, gig work can be a rewarding and lucrative career path. By being careful to take the right steps to protect yourself, you can ensure you thrive financially in the gig economy.
Remember to file your taxes
If you earn at least $400 or more from gig work of any kind, you’ll need to file a tax return with the IRS every year. Keep in mind, however, this doesn’t necessarily mean that you’ll have to pay any tax. It’s therefore important you keep a record of your income and expenses throughout the year in order to ensure your filing is as accurate as possible.
If you do owe any tax, be sure to pay it on time to avoid penalties (payments are usually made four times a year). And, since taxes can naturally be confusing for people, you may also want to contact an experienced tax professional to take care of this aspect of gig work on your behalf.
Know your rights
Although gig workers don’t have access to the same rights as employees regarding paid sick leave or vacation and health insurance, there are other ways they can protect themselves (with lawsuits, for example).
New legislation also promises to provide gig workers with some legal protections; in particular, gig workers would be able to reject or accept assignments as desired within a worker flexibility agreement with their employer.
Additionally, gig workers with disabilities also remain eligible for disability benefits, although hours or earnings caps are usually in place. Qualifying for Social Security Disability Insurance (SSDI), in particular, can be easier for gig workers (you need to have worked for five years in the last decade and have paid taxes). If you’re unable to enter part-time or full-time employment, gig work can help you meet the eligibility criteria for these benefits
Make an effort to save
Saving a portion of your earnings should be a priority at any stage of life, but especially if you’re a gig worker without access to an employer-sponsored 401K or retirement plan. Fortunately, setting both short-term and long-term savings goals doesn’t have to be complicated. Above all, you need to open a savings account, which has the added bonus of generating interest on your savings.
Gig work is often without steady income, and you may find a savings account essential for covering bills and expenses in between payments. As for long-term savings options, you can schedule a meeting with a financial advisor to discuss the best choices for your goals and circumstances.
Gig work can be a flexible, fulfilling, and lucrative career path. By remembering to file your taxes, knowing your rights, and making an effort to save your earnings, you can ensure you thrive financially in the gig economy.
Photo by Robert Anasch