What is gig work?

Work that you do without a long-term employment contract is called “gig work.” People who work this way are sometimes called “contingent workers” or “alternative workers.”

Examples of gig work:

  • Independent contractors
  • Freelancers
  • Independent consultants
  • On-call workers
  • Workers who find work through temp agencies

Potential gig work employers*:

  • Uber/Lyft
  • Rover
  • Airbnb
  • Care.com
  • TaskRabbit
  • Guru
  • HopSkipDrive
  • Freenlancer
  • Fiverr
  • Doordash

*Examples of companies listed herein are provided for illustrative and/or informational purposes only. These are not exhaustive lists and should not be treated as such. Hands on Banking and Wells Fargo do not endorse the products or services that may be offered by these organizations.  


Gig work as your main income

There are lots of reasons to consider gig work as your main source of income, but the main factor that attracts people is the flexibility it offers. In many cases, you can choose when or even where to work.

smiling woman driving

If you are considering pursuing gig work as your main source of income, here are some questions to ask:

How does pay or other compensation work?

It’s a good idea to research how much money you can expect to take home. If a company you’re considering doesn’t provide this information, you can research how much the average employee makes in a year and then divide that by 40 hours a week and 52 weeks (less any time you plan to away from work) in a year. This will help you with budget planning.

What commission does the company take?

In some cases, the employer will subtract a fee from the money you make. This is called a commission. Companies charge this in exchange for connecting you with customers. The more they take, the less you make. So, make sure you factor that in when you are figuring out how much you could earn.

How widespread is the company?

Since flexibility is such an important benefit of switching to gig work, be sure that the company you choose has lots of locations across the country (or the world). That way, you can truly do it anywhere.  

How hard is it to get started?

Find out what’s required to get started. Be sure you can meet all the requirements. For example, some companies require that you own a car or a house in order to get started with your first gig.

What are taxes like?

Some companies that use gig workers withhold taxes and give you a W2 at the end of the year. Others don’t and give you a 1099 instead. How they handle taxes will affect how you pay your taxes. Make sure you understand.

Is it a good place to work?

As you probably know, not all companies are created equal. Do some research and make sure the company you are considering treats its workers and independent contractors well. Also, check into the company’s performance and sustainability.


Gig work as extra income

There are a couple reasons why you might consider taking on gig work in addition to your regular job. You may need the extra money to help make ends meet. You might be saving for a big expense, like a home or a child’s education, and the extra income will help you meet your savings goal faster. Or, you could be considering making a jump into a new industry, and a side job will help you get experience without giving up the stability of your current job.

No matter the reasons, here are some considerations:

Do you have the time?

Keeping track of two separate work schedules can be tough. However, if your current job has predictable hours, and if you usually spend 40 hours or less per week there, you might be able fit a side gig in on the weekends or during other off hours.

Do you have the energy?

Even if you technically have the hours to spare, you need to ask yourself if you have the energy. If you come from work exhausted every day, adding more work to your plate might not be worth it. Extra money can be helpful but consider your physical, mental, and emotional health as well.

Is the job right for you?

Again, earning extra money is an important goal, but it might not be your only goal. Make sure that if you’re sacrificing your free time outside of your normal work hours, that you’re getting plenty in return. Is the side gig something you really enjoy doing? Does it satisfy you creatively? Will it help you start a new career?

Do you need to tell your current employer?

Take a close look at your company handbook. There are different rules around outside employment, and you don’t want to accidentally break them and risk losing your main source of income.


Budget tips for gig workers

Flexibility is one of the great benefits of being a gig worker. However, with that flexibility can come uncertainty. It can be hard to make a monthly budget and stick to it if your income can vary greatly from month to month or week to week.

Here are some tips to consider.

Estimate and track.

As a gig worker, you may not be getting a set paycheck every week or every other week as you may be used to. In order to create a monthly budget as a gig worker, you’ll need to estimate how much you plan to make in a month. Then, you’ll need to track how much you actually make and compare. Over time, you’ll be able to estimate your income more and more accurately.

Plan for the worst-case scenario.

If you make your budget based on your lowest predicted income, you’ll know you can always stick to it. Even better, when you make more than your budget in a given month, you can add it to your savings. Over time, you’ll be able to build a savings account that can help get you through any dry spells.

Plan for business expenses.

When you work a regular full-time job, your employer pays for things like office supplies and computers. Keep in mind that anything you need to do your job as a gig worker, you’ll likely need to pay for yourself.

Plan for taxes.

If the company gives you a 1099 for your work at the end of the year, it means they will not take taxes out of your paycheck…but you’ll still need to pay taxes. Consider setting aside money regularly; for example, a percentage of every check. That way you won’t be caught by surprise on Tax Day.

Create an emergency fund

Ideally, everyone would have a fund that could cover 3-6 months of expense in case they were unable to work for some reason. For gig workers, this is even more important since you may go through periods of time where it’s hard to secure work. If you have an emergency fund, these dry spells can be part of your normal up and down rather than a total disaster.


The importance of good credit for gig workers

Good credit is important because it can help you reach financial goals like owning a house or a car. Being able to access credit can allow you to cover expenses during lean months. Having access to credit can smooth out the bumpy road of gig work.


Setting and reaching financial goals

jars with coins and growing plans

It can be easy to get lost in the day-to-day of gig work. Financial goals can give you a powerful reason to create and stick to your budget. They can make all the income and expense tracking feel more meaningful.


Retirement planning for gig workers

Workers with a traditional 9-5 job often have a retirement plan built into their compensation package. Gig workers often don’t have this benefit, but that doesn’t mean you can’t save for retirement. It just means you have to be a little more proactive.

Know your options

There are many types of retirement accounts available to self-employed or gig workers. You should consider talking to a financial planner to learn more.

Make saving a priority

Consider choosing a percentage of your income that you want to reserve for retirement and make it automatic. Regardless of the amount, try to be consistent. Both your retirement fund and your emergency fund are priorities so try to find a balance with your savings.


Taxes and the gig economy

Income that you make as a gig worker is taxable income. If taxes aren’t withheld taxes for you, you will have to pay them yourself. If you make above a certain amount, you’ll have to pay what’s called “quarterly taxes” or “estimated taxes.” This is where you estimate how much you’re going to make in a quarter and then pay taxes based on that estimate.

To learn more about managing your taxes, visit the IRS website: Manage Taxes for your Gig Work.

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