Long gone are the days when working a single 9-to-5 job was the standard for most people in the U.S. Today, a growing percentage of the workforce needs to have multiple jobs and several sources of income to make ends meet.
According to a Gallup poll, 36% of U.S. workers participated in the gig economy in some capacity in 2018. Gallupâ€™s sample here includes people holding either a primary or secondary freelance job, including both part-timers and workers holding multiple jobs. Thatâ€™s roughly 57 million people.
Some see the rise of gig economy jobs as a negative development that hurts workers, while others praise the flexibility they offer. Whichever way you feel, weâ€™d like to offer you some sound advice on how to succeed in this type of economy.
The gig economy is that part of the labor market where people find temporary jobs or work with flexible hours to replace â€” or even add alongside â€” a traditional full-time job. In the gig economy, hourly and even salaried workers are replaced by freelancers and independent contractors.
Gig economy jobs range from adjunct college professors, to Lyft drivers, to freelance writers. Finding a gig doesnâ€™t always have to be in your professional wheelhouse, either. Many gig economy workers turn their hobbies into money-making activities.
A 2017 LinkedIn survey found that the main reason people choose to take gig economy jobs was to make more money â€” 57% of responses. After that â€” 46% of responses â€” came peopleâ€™s desire to control their own schedules. Other responses included work/life flexibility, being oneâ€™s own boss, trying something new and financial hardship.
Interestingly, nearly as many (40%) expressed other reasons related to money: 21% said they were motivated by financial hardship, while 19% responded that they turned to gig work to have some sort of income while between jobs. A number of respondents â€” 41% â€” indicated that they freelance in addition to their full-time or part-time job.
Your reason for entering the gig economy might be different from your neighborâ€™s rationale. Nevertheless, there are common tips and tricks that can help you navigate this brave new world.
In the gig economy, you can end up with many sources of income. Develop a reliable system to keep track of job opportunities, clients, sent and unpaid invoices and other gig-related stuff. Organize your invoices in a spreadsheet to keep on top of which ones are filled and which remain unpaid, and get a filing cabinet to keep on top of paperwork. If your paperwork is digital, maintain well-organized file folders on your computer so everything has its own place.
Staying on track in the gig economy means understanding your income. Sure, organizing your invoices is part of it, but more importantly you need to record and analyze your earnings every month. Income can be unpredictable, and rigorously tracking on a spreadsheet can create a more manageable view of your month-to-month budget.
When you go out to take jobs or communicate with potential clients, remember that you represent yourself and your business. According to a representative of TaskRabbit, a service for finding gig economy jobs, the best freelancers are those who build strong ratings and reviews, which helps to increase the number of jobs theyâ€™re able to book.
â€ś[Our freelancers] can make a good impression before they even meet their client, by highlighting their experience and tools. Furthermore, Clients appreciate [freelancers] who provide prompt responses to task requests,â€ť said the TaskRabbit representative.
Shelli Fitzgerald, who works with TaskRabbit (their freelancers are known as â€śTaskersâ€ť), echoed these keys to success. â€śAlways remember to be kind, trustworthy; make your client comfortable. Be creative, market yourself, ask for referrals from clients and friends.â€ť
Without a steady paycheck every two weeks, it can be hard to save regularly. Tracking your income can make things easier, including saving. It can help you find the places where you can save even a little bit, in the event you fall short in the future.
Trying setting up automatic and recurring deposits into your savings account. That can be $25, $100 or as little as $5. As long as you save something â€” and stash it in a high-yield savings account â€” youâ€™ll have a financial cushion to fall back on. This can also help you avoid taking on debt from loans or credit cards to cover even the smallest expenses.
â€śMoney is not always steady, so you need to keep a cushion,â€ť Fitzgerald advised. â€śYou also have to save money for the slow times. Never depend on one stream of income.â€ť
Just because you donâ€™t have an employer-sponsored 401(k), you can still save for retirement while youâ€™re self-employed in the gig economy â€” check out individual retirement accounts (IRAs). Traditional IRAs allow you to deposit pre-tax money, then pay taxes on your withdrawals in retirement. With a Roth IRA, contributions are made from after-tax income, and withdrawals are tax-free. Keep in mind that your deposits, whether Roth or traditional, must fall within the annual IRA contribution limits set by the Internal Revenue Service (IRS).
You may also open a solo 401(k). Like an employer-sponsored 401(k), you contribute a portion of your income to the account, which will then grow tax-free. A solo 401(k) is a good option if your income exceeds IRA limits.
Employers donâ€™t automatically withdraw taxes from your gig economy paychecks, leaving you responsible for figuring out your estimated tax payments on IRS Form 1099 each quarter and paying the amount to the IRS yourself. The IRS also assesses a self-employment tax to collect Social Security and Medicare taxes, at a rate of 15.3%. If youâ€™re working for multiple employers in a year, youâ€™ll have several 1099 forms to track and file.
When you enter the gig economy, youâ€™ll most likely have to fund health insurance yourself or hop onto your spouseâ€™s plan, if available.
Natasha Ishak, a freelance writer in New York City, cited being on her partnerâ€™s health plan as a big factor in her ability to freelance full time: â€śWithout that, I am not sure I would have survived solely on freelancing full-time, even though I was hustling 24/7.â€ť
Additionally, check out the healthcare marketplace at healthcare.gov, where you can compare insurance plans from private insurance companies.
In the gig economy, there will be times when it can seem like you should be giving 110% at all times, but that kind of lifestyle isnâ€™t sustainable for everyone. Allowing some time to yourself in a busy schedule can help you stay sane and able to organize your projects.
â€śOne of the biggest things that enabled me to keep on juggling all my different assignments was making sure that I didnâ€™t reach the point of over-exhausting myself,â€ť Ishak shared.
Cut yourself some slack and ease up on the grind for a day or two if you ever start to feel overwhelmed by the work. Even better, breaks like that can help you refresh and overcome any mental blocks.
If youâ€™re just starting out in the gig economy, identify what you like to do and what youâ€™re good at. Good with tools? Browse TaskRabbit for repair jobs in your neighborhood. Just browsing gig economy apps can help you find jobs you connect with. Thereâ€™s a ton of opportunity out there, just waiting for you to grab it.