Ready to Join the Gig Economy? Here’s Where You Can Start
You’ve likely heard a lot of buzz about how the gig economy is disrupting the job market in the US. Perhaps you’re ready to join the legions of Americans working at home in their PJs or starting a little side hustle to earn extra cash. Here’s a look at what the gig economy is and tips for staying financially successful if you join it.
What Is the Gig Economy?
Before getting into how to join the gig economy, let’s take a look at what it is and who participates. The term “gig work” in the broadest sense refers to work done by independent contractors.
These workers could be anyone who is working a freelance job, though the term has also specifically come to mean people participating in jobs that are offered largely through online apps like Uber, TaskRabbit or Postmates and sometimes described as sharing economy jobs.
With all the different types of work that may fall under the umbrella of gig work, getting an accurate estimate of the size of the gig economy is difficult.
A 2017 study by the United States Bureau of Labor Statistics says 3.8% of workers, or 5.9 million people, held contingent jobs—jobs they expected to be temporary. That said, a 2018 Gallup report pegs the number of workers participating in the gig economy at around 36% of Americans, which includes online platform workers and independent contractors.
Technology is one of the main drivers of the gig economy through mobile apps, or through online technologies like Skype or Slack that make working remotely easier.
Why Join the Gig Economy?
Reasons for joining the gig economy vary. For example, Millennials concerned with work-life balance may pick up gig work to have greater control over their schedules.
Retirees might join the gig economy to bring in a little bit of extra cash to supplement their fixed incomes. Or someone with a full-time job may use gig work as a side hustle for extra income to meet financial goals like paying down debt.
The flip side to these benefits are challenges like unsteady work schedules or pay and a lack of employer benefits. Depending on your goals, it can also take a lot of self-discipline to create your own schedule and drum up work, especially if you’re trying to make the gig economy your full-time job. Yet, for many, the advantages outweigh these challenges.
Joining the Gig Economy
If you’re thinking about picking up some gig work, one of the first things you’ll likely want to think about is what your goals are for the money you’ll make. If you’re thinking of pursuing gigs as your primary job, then you might consider freelance work that offers a fairly steady stream of income and work to build a book of regular clients.
Curious what the highest paid freelance jobs are in 2019 ? Freelancers in the field of artificial intelligence and deep learning can earn more than $115 per hour, blockchain experts can earn more than $87 per hour, and if you’re good at building robots you could earn more than $77 per hour.
If you only have a few hours a week that you can devote to the extra work, you may want to pick up a gig, such as driving for a rideshare app, as your side hustle. On average, workers with a side hustle earn an extra $500 per month . The long-term viability of the gigs you pick up may be less important than looking for one that offers a good hourly wage and flexibility.
If you find yourself in the latter category, here’s a look at the average monthly earnings of some of the largest gig economy companies as reported in a 2017 study by Priceonomics:
• Vacation rentals app: Have an extra guest room and don’t mind rooming with strangers? Or a mountain cabin you only use a couple times a year? Users of the most popular rental service can earn an average of about $924 per month renting out rooms in their home or other properties.
• Productivity app: Good at running errands? You can earn an average of $380 per month performing odd jobs from picking up dry cleaning to fixing a leaking faucet with this app that matches local labor with neighbors who need help with everyday tasks.
• Ridesharing: When’s the last time you took a taxi? Rideshare services are nearly ubiquitous in cities big and small. Drivers for popular ride sharing apps can expect to earn about $377 and $364 per month respectively.
• On-demand food delivery: Monetize other people’s laziness. As a delivery person for restaurants, grocery stores, and other retail shops, you can make about $174 per month.
• Craft e-commerce: Recently gotten into making macramé plant hangers? Turn your hobby into income by selling it through a popular online artisanal marketplace for an average of $151 per month.
• Freelance marketplace: Got a few minutes for some remote work? As an online marketplace for freelance services worldwide, workers have the chance to earn an average of $103 per month.
Thriving Financially in the Gig Economy
Whether you’re working full-time as a freelancer or you’re a side hustler, you may not have access to some of the employer-sponsored benefits that other full-time workers have. But fear not: There are options out there that can help keep you on the path to your financial goals.
You can invest in your future by putting money toward your long-term goals, even if you only have a little bit of freelance income to invest. Even if you aren’t employed full-time and don’t have access to an employer-sponsored 401(k) there are still retirement savings options that offer the benefit of tax-advantaged savings.
You can open a traditional or Roth IRA on your own which can allow you to save up to $6,000 per year. If you’re self-employed you may also want to consider opening a Solo 401(k), which allows elective deferrals of $19,000 per year.
This type of tax-advantaged account can help you supercharge your retirement savings through investments that grow and compound tax-free, in the case of Roth accounts, or tax-deferred, in the case of traditional accounts.
You can’t withdraw savings from your retirement accounts without opening yourself up to withdrawal penalties and the possibility of income tax until age 59 ½ , so if you have other long-term goals you are working toward, you can consider investing your money through a brokerage account.
You can manage your investment account yourself using active investing, or SoFi also offer automated investing to build your portfolio.
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