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Becoming a gig worker could be the best thing you ever do for your finances. Learn how to avoid the pitfalls that come with this work style. [[{“value”:”
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Gig work is becoming more and more common as the cost of living rises and Americans want more flexibility with their employment situation. According to Statista, there are 57.3 million freelance workers in this country — and many of them aren’t full-time freelancers, but people who do some gig work alongside another job.
If you’re hoping to join the gig economy yourself this year, welcome to the fold. I became a full-time freelancer a year ago, and making this move has helped my finances, improved my well-being, and increased my happiness overall.
Unfortunately, gig working is not without potential pitfalls. Here are three of them to steer clear of so you can succeed in the gig economy in 2024.
1. Ignoring professional development
Working for yourself means advocating for yourself and focusing on your own professional development in a way you might not have when you were someone’s employee. So it’s not a good idea to get comfortable with the status quo when you’re a gig worker. Instead, focus on building your existing skills and adding new ones.
For example, if you’re a freelance writer who tends to stick to the same subject matter, consider branching out and looking for assignments in different subjects. You can add to your income this way as well.
Keep networking, too — if you have friends in the same line of work, share ideas and speak up for each other. If you’re not already on LinkedIn, create a profile and keep it updated as you add those new skills and clients. Artificial intelligence is becoming a bigger part of our world, and if you’re worried about losing your job to AI, becoming a well-rounded professional may help you stay employed and relevant for longer.
2. Never taking time off
If you’re coming to gig work from a more traditional employment situation where you were limited in how much money you could earn (and it was never enough), it’s easy to fall into the trap of working all the time. (Yes, I am speaking from experience.) But if you never take time off, your work will suffer — and your health could, too. It’s hard to go from having paid vacation time to not, but there are ways to cope.
I decided at the end of 2023 that I wanted to give myself “paid time off” in 2024. So I set a goal to save a reasonable amount of money that I could use to “pay” myself if I had a day where I couldn’t work, or just didn’t want to. I recommend doing the same — don’t be afraid to take time for yourself as a gig worker, even if you’re tempted to do nothing but work.
3. Forgetting about taxes
As a gig worker, you may actually be a small business owner (congratulations!), so taxes will be a much larger part of your world than they are for W-2 employees. Since your earnings won’t be taxed, you’ll likely need to pay quarterly estimated taxes four times a year (January, April, June, and September), and if you neglect to do this, you can be penalized by the IRS.
Before you panic, know that the best tax software for small businesses can help you stay on top of what you owe. Working with a tax professional can also give you peace of mind. Just don’t forget to keep track of all your income — when you receive a 1099 form from a client during tax season, the IRS gets a copy, too, so it will know if you’re underreporting your income.
And hey, it’s not all bad news when it comes to taxes — you’ll likely pay more taxes (since you’re taxed as both employee and employer), but you also get to take different and often more deductions than standard employees can. For example, if you buy a new computer for your graphic design work, you can write off the cost of it and lower your taxable income.
Gig work can help you pay off debt, pad your savings account, and even create a new life of freedom and work-life balance for yourself. Now that you know some common mistakes to watch out for, you’re ready to find success as a gig worker.
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