It’s no secret the economy is unstable. As layoffs are up 200 percent across industries, the unfortunate reality is that people do not feel safe in their positions. A shaky economy also means people must make more to survive with a side gig. That’s why it’s no surprise that ahead of 2023, 73 percent of US workers say they planned to start or continue working freelance. The interest in working for different companies at different times rather than being permanently employed by one company is rising. The prediction is that contracted work will grow by 16.8 million people by 2028. If you’ve ever considered freelancing, now is an opportune time to learn more about the side gig economy.
It may seem scary, but venturing to monetize your passion projects can be rewarding. You’ll learn a lot about conducting business and creating systems. You’ll also learn to challenge your creativity and skillset in whatever you produce. No longer is your passion project just for fun, but there’s a responsibility to please a buyer. There’s a lot to consider before becoming a freelancer, like where to find work, how to pay taxes, and how to budget to prepare for a healthy financial future with inconsistent income. You should know some things if you’re looking to dive head first and embrace the gig economy.
Depending on what you create, websites and job boards usually congregate jobs for freelance work in that area. If you’re in media, Fiverr is a popular site. Upwork is also well-known for communications professionals, but IT, finance, and engineering professionals can also find work on their site. There’s more than likely already a freelancer in your field of interest who has taken to YouTube or TikTok to explain their journey. Binge-watch their videos and take notes. You’ll find a lot of helpful information to break into freelance work.
It’s essential to understand freelance taxes now that you’re paid differently. Most contracted workers are paid in full, so paying taxes is your responsibility since it’s not taken from your paycheck. Talk to a tax specialist when you begin so that you know how much to save from your paycheck. They’ll guide you through filing your report at the beginning of the year and setting up systems to be in good standing with the government for the following year. Uncle Sam will always get what’s his! The last thing you want to be is paying thousands of dollars in out-of-pocket taxes because you still need to save from your check. The horror stories are all over TikTok.
It takes a lot of intentionality to budget your freelance income. Your paychecks may sometimes differ, making forming a budget more difficult. It can feel like you don’t have control over your finances because of the inconsistencies. To best manage your additional income, Victoria Ruth Mayes, Financial Representative at Northwestern Mutual, recommends first “build up a cash reserve or savings accounts.” Every penny you earn as a freelancer should be deposited into a separate account. It makes it easier to track money. Next, “account for fixed expenses and give yourself some cushion room,” Mayes continued. Since paychecks can be inconsistent, you must jot down what’s non-negotiable to spend on. That can include personal and business bills, investments or wellness activities – whatever your full-time job isn’t funding, your side gig can help with that, too. Then, you make that amount a benchmark to hit every month. Everything else will be extra and you can decide how to spend it.
Outside of financials, you have to consider yourself as your schedule will change drastically. The time usually spent cooking, calling friends and family, watching Netflix or going out after your nine-to-five is now dedicated to working. “Free time” doesn’t exist as it once did; therefore, you must intentionally maintain a calendar, stay on task and examine your life’s priorities.
There’s much to consider before embracing the gig economy, but it’s manageable. Without it, the number of people taking on freelance work wouldn’t grow as aggressively. If you plan carefully and utilize the resources provided, you’ll be off to a great start.