A growing number of workers are gravitating to the gig economy, where they can set their own schedules and, if they want, make money doing more than one kind of job. Over a third of U.S. workers – 36%, according to The Tech Report – support themselves this way, and even more do at least some gig work. It’s a career choice characterized by freelance work and short-term contracts, meaning things can change fast.
There are a lot of advantages to this level of freedom! But prepare for the financial risks, as well. You can protect yourself and your money by taking a few key steps while times are good so you’re safeguarding those hard-earned dollars and have resources to cover you during slower periods that may lie ahead.
Have a Safety Net by Creating a Contingency Budget
Perhaps the most risky aspect of gig work is that it is often one and done. Sure, you can lose any job. But generally, a full-time job or part-time job is more stable. Companies invest time and money into searching for workers. It costs them as well as you to go through the interview process and then train a new worker. In the gig economy, there is much less of a financial investment on their part to hire someone new, as it is done on a case by case basis. This situation also amounts to less recourse if you suddenly get sick or lose work unfairly.
All of this uncertainty should be balanced by at least some form of safety net. Think of it as money you set aside for a rainy day. Saving money can be hard when you have lots of bills to pay, a family to support, or both. The best way to approach your contingency budget is with the mindset that something is better than nothing. Stashing away even a few dollars a week adds up and can cover the cost of groceries or a utility bill during an unexpected financial downturn.
Keep Receipts & Deduct Expenses Related to Gig Work
The more money you make, the more you may owe the government at tax time. This is not as much of an issue for lower income folks, but it’s always wise to keep a detailed list of any work-related expenses that could reduce the money amount you may eventually owe. Typically costs related to gig work include:
- Gas & Auto Expenses
- Office Supplies
- Phone & Internet
- Furniture
- Work-Related Subscriptions & Memberships
- Goods Needed for Products You Sell
How to do your taxes properly is another story. Review your situation with an accountant or other financial pro to make sure you’re taking the right steps throughout the year and lower your tax liability as much as possible.
Keep Detailed Financial Records – And Examine Them Regularly
Keeping detailed records throughout the year will help remove a lot of the stress that can come with freelancing. You are your own boss, after all. Your records will help you answer some key questions about your financial situation:
- How much revenue is coming in each month?
- Are you getting paid on time?
- How much are you spending on work expenses?
- What is your estimated net income, monthly and annually?
- Are all of your gigs worth it – or are some money-suckers?
- Are there any past-due invoices to follow up on?
Clear records will help you when someone forgets to pay you. You can follow up with this person sooner, while the work is still fresh in everyone’s mind.
Take Advantage of Financial Services You Can Trust at CFSC Currency Exchanges
When you’re a gig worker, it’s good to know there is a quick and easy way to cash your checks as soon as they come in. A bank account is not available to everyone, and sometimes you want a place that won’t ask a bunch of personal questions just to get paid at the end of the week.
With their convenient schedules and accessibility to everyone, neighborhood Community Financial Service Centers (CFSCs) throughout the country are there for you when you need a check cashed, money sent abroad, or bill paid. With little wait, we ensure financial tasks like these are done safely so you don’t have to worry about the details. We can also help you get a prepaid debit card so you stay on top of those dollars coming in each month.
Head to the nearest CFSC location to get started. But first, check us out online to find out about the other financial and auto services we take care of every day!