Are you familiar with the Gig Economy? The name has only become popular over the last few years, but the idea has been around for a long time. Gig work doesn’t fit neatly into a 9-5 career bucket, such as driving for delivery services, ride-sharing, freelance work, and contracting. But the gig economy isn’t always puppies and unicorns. Some people do it full-time, and others use it as a side hustle. Here are some things you should know about gig work and how it can affect your finances.
What is the Gig Economy
The gig economy is a labor market defined by short-term, contract, temporary, or freelance work. You probably know many people who have transitioned from traditional employment to gig work, whether on their own or through various tech companies that have sprung up to facilitate gigs, such as ride-sharing or food delivery apps.
How Does Working Gig Jobs Affect Your Finances
Several types of employment fall under the category of Gig Jobs. This includes freelance work, where you will receive a 1099 at tax time. Or it could be short-term temporary work where you work with a staffing agency, and they become your employer. So even though you’re only working short-term jobs, you still receive a W2. If you’re receiving a W2, the employer is taking care of your employment taxes, such as OASID or Social Security. If you receive a 1099, you’re responsible for paying these taxes, often quarterly.
Protecting Your Credit when Working Gigs
Tax implications aren’t the thing to consider when working gigs. Our culture has combined many essential benefits with the workplace, including retirement and health insurance, which are also critical factors for your finances when you work gigs. Many gig workers rely on credit to ensure they can keep up with payments, so protecting yourself is very important.
Is a Side Hustle Good for Paying off Debts?
Many people also use the gig economy as a side hustle. For example, they may work a full time job but drive for ride-sharing on weekends. Sometimes, these gigs can add up, and you can make extra money to help pay down debts. Make sure you’re considering the tradeoffs of your time and whether the income you receive is worth the additional hours you’re working. Side hustles can increase your overall income, so it’s worth looking into if you want to make extra money.
Do you want to protect your credit while working in the gig economy?
A message from Dale Marco:
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