There’s an exciting career revolution taking place – say hello to the “gig economy,” a booming new job market characterized by workers who call their own shots, set their own schedules and control their own destinies.
Nowadays more and more Americans are becoming a part of this employment shift. In fact, according to a CareerBuilder survey, 29 percent of workers have some sort of side hustle, especially millennials -- 44 percent of 25-34 year-olds and 39 percent of those between 18-24 report having a side gig. According to a Princeton University study, the percentage of workers engaged in alternative work arrangements rose from 10.7 percent in February 2005 to 15.8 percent in late 2015, while employment in traditional jobs rose by only .4 percent during the same period.
These days, as a freelancer, a consultant or an independent contractor, this might mean you’re earning money selling goods through a company like Arbonne or running a home-based business. Whether you’re a new graduate looking for a job, a retiree looking for some extra cash or a stay-at-home parent hoping to grow your nest egg, there are many advantages to becoming part of the gig economy. Here are a few ways you can take advantage and cash in.
What’s Your Worth?
When it comes to getting paid for a side job well done, many times you can call the shots. If you work harder and longer or sell more products, you could earn more money. If you’re a freelancer, you can even set your own hourly rate. Check out resources like the Editorial Freelancers Association to see what the going rates are for writing, editing, web design and more. And if you’re working on something more technical and complex that requires specialized knowledge, your work could actually be worth more. Do your research to determine fair compensation. Resources like BeeWits can even help you calculate it online.
Know Your Numbers
Cash earned from your side gig should be reported on your tax return. Avoid additional tax assessments and penalties by reporting all income received. Do your research and talk to certified accountants to see what deductions you are eligible for. Common deductible expenses may include gas mileage, subscriptions, and tools, equipment or services used to conduct business.
Purpose and Protection
The freedom and flexibility is what attracts many people to join the gig economy, but with autonomy comes responsibility. It’s important to take special care of your independence, and income, by planning ahead. Many personal insurance policies do not cover incidents that happen when you are being paid to do a job. However, there are options. “Some insurance carriers offer special policies and endorsements that protect gig economy workers,” said Ann Zaprazny, senior vice president of Commercial Products, Erie Insurance. “We strongly advise gig economy workers to talk with their insurance agents about their specific needs and situations before taking on any risk. Without such coverages, you could be on the hook for expenses if, for example, you get into a car accident on the way to pick up a passenger while driving for a ridesharing service or are a victim of theft when your in-home stock of LuLaRoe goes missing.”
Stash and Save
Four in 10 self-employed workers don’t have a retirement account, according to a survey from Small Business Majority. Opening an Individual 401(k), a Simple IRA or SEP IRA may be viable ways self-employed individuals can save for their retirement. Even just stashing some money away in your savings account every month can go a long way. While it might be tempting to take the money you’re earning on the side to put toward something you want now, the payout could be huge in the future.