Gig work is a dream come true those who want to supplement their income without the demands of a boss and a strict work schedule. Side hustles are becoming more popular as people embrace the freedom and extra cash offered by gig work.
But for some, gig work is more than just a part-time job. Many use gig work as their sole source of income and are completely in control of their schedule and the work they choose to do.
Sound enticing? We think so, too! But making the leap from full-time employee to full-time gig worker involves a lot more than just wanting more freedom. Here are five things to take into consideration before making such a huge move.
Can you cover your bills?
Money is the first thing most of us think about when we’re switching jobs, and it’s no different for those looking to do gig work on a full-time basis. It’s hard to know if you can afford it if you don’t have a budget!
Create a budget and figure out what your minimum expenses are each month. It’s a good idea to look at your last few months of bank statements to see how much you’re really spending. Once you have this information, you can decide how much you need to make each month to continue covering your bills. You may be able to cut some expenses, like how much you spend eating out or on entertainment expenses.
What about benefits?
Bills aren’t the only expenses you’ll have as a full-time gig worker. Most employers offer their employees a range of perks. These could include covering all or part of health and dental insurance, 401(k) matching, paid time off, deducting employee taxes, and paid parental leave. These perks are often forgotten until we need them.
As a full-time gig worker, you’ll be responsible for your own benefits. First, you’ll need to make sure you’re saving for taxes and including them in your budget. You’ll need to find an individual health insurance policy or a health sharing plan that can help you cover medical expenses. Organization like the Freelancers Union may be a good place to start looking for health insurance plans catered to the self-employed.
Even without an official employer, you can still save for your retirement with a Roth IRA or other investments. If you don’t already have one, now might be a great time to get set up with a financial advisor to help you plan for your future. And make sure you’re saving up for some days off while you’re at it. Even gig workers need a break!
Does more time = more money?
Once you know your monthly expenses (including extra expenses like paying for health insurance out of pocket), look at how much you’re already making with your gig work. How much more do you need to make to cover your expenses? And, if you quit your job and dedicate more time to gig work, will you be able to earn more money?
With some types of gigs, like delivering food, you may find more time doesn’t necessarily mean more money in your pocket. If there’s a limited amount of work available on your platform of choice, or only a few hours a day when it makes sense to work, you may need to sign up with more gig worker apps to create another income stream.
Do you have an emergency fund?
Some of the flexibility offered by gig work can make sticking to a budget challenging. Even if you can usually cover your bills, you may have months where your income doesn’t quite meet your expenses. Instead of stressing out, your emergency fund can have your back and help you bridge those gaps on months when you can’t quite make ends meet. Make sure you have a decent emergency fund before switching to full-time gig work.
How flexible are you willing to be?
The flexibility of gig worker payments and the ability to earn income on your own terms is one of the biggest draws of life as a gig worker. But it may also mean you’re working when you don’t want to. You may need to pick up extra work to pay an unexpected bill or take a few gigs that might not be your first choice so you can make ends meet. Relying on the flexibility of gig work means you need to keep your expectations flexible, too.
Moving to full-time gig work can be a rewarding change of pace from a full-time job. Budgeting becomes even more important with a variable income, and sticking to a budget as a gig worker is easier with a partner like indi. Categorize your income, save for taxes, and keep track of all your payments in one place, no matter where they come from.
indi has no affiliation with the Freelancers Union. This article is not intended to provide financial, tax or legal advice and the information provided may not address your individual circumstances.