How to Make Money from the Growing Gig Economy
With half of the United States expected to enter the gig economy in the next five years, chances are, you’re one of them! But before you dive in headfirst, keep in mind that the “gig lifestyle” can come with just as many challenges as perks. So how can you take advantage of these opportunities and earn a good living, while at the same time, avoiding the pitfalls inherent in this new wave economy? Read on for a few essential tips.
Get Smart About Your Gig Search
Not all gig sites are created equal. The Internet is rife with scams as well as opportunities, so you’ll need to develop a discerning eye to avoid unfair deals and difficult clients. The faster you’re able to find quality clients, the more time you can spend doing work instead of searching for it.
If you have a skill to sell (such as web design, video editing or writing), check out job boards where you can find projects that match your skills. Remember that every job site comes with its own pros and cons. Upwork, for example, is a great site for beginners to build experience. There’s always a large pool of jobs to choose from and getting paid is easy. However, it can be competitive, with a lot of price undercutting and no filter to weed out scam jobs. Toptal, on the other hand, is best for high-skilled freelancers who don’t want to client-hunt. Jobs are easy to search, since Toptal will only show you projects relevant to your skills, and clients are well-vetted, so you don’t need to worry about scams. The downside is that the application process is very selective and the pay cycle can take several weeks.
If you’re more into doing whatever odd jobs are needed, try out gig apps on your mobile device, like Uber (driving), TaskRabbit (handyman jobs), Dolly (moving and hauling) and GrubHub (food delivery). These apps are easy to use and convenient. Application processes will vary depending on the app, but once you have an account, just sign in whenever you want to work to receive on-demand jobs. The apps will automatically match you to nearby gigs.
Never Work Without a Contract
A Freelancer’s Union survey found that only 28% of freelancers in 2015 worked under written contract. That same survey reports that 50% of freelancers regularly had trouble getting paid, 81% were paid late and 34% were not paid at all.
A contract not only protects you when you encounter payment problems, it also helps each party understand, in written detail, what is expected of the other, so that projects don’t grow beyond their initial scope, prices don’t change and deadlines are clearly understood. Basic contracts should include identification of each party, a detailed description of the project and work expected, and the agreed-upon price. Never begin work before the contract has been negotiated and signed.
Set Specific Blocks for Both Free Time and Work
Your work time doesn’t have to follow regular office hours, but it’s best to give yourself a schedule to stick to, so that you neither over-work nor over-play. Make sure to give yourself the hours you need to complete your gigs, as well as some dedicated rest time, so you don’t burn out. Plan your work schedule according to your financial goals. How much money do you need to make by the end of the month? How many gigs do you need to meet that goal, and how much time does each project need for completion? Break down your monthly financial target into weekly gig goals, so that you don’t run out of time and end up short on income at the end of the month.
To better calculate how much time you’ll need for work, start by recording your stats on current jobs. Mark down times for each task, and total them according to project, client or task-type. Remember to include in your plan both billable (direct work on client projects) and non-billable hours (tasks outside of projects, such as client communications, gig hunting and administrative tasks). For easy tracking, try out some time tracking apps like Toggl, TrackingTime, and Hours.
Create a System for Tracking Your Income and Payments
This is especially important if you have multiple clients or gig types. Whether it’s an excel spreadsheet or an invoicing app like Paypal or Wave, you’ll need to have an organized system for creating invoices, setting due dates and receiving payments. With more young Americans trying to make it on a limited income, you’ll want to make certain that every cent you earn can be accounted for.
As a freelancer, you’ll also need to plan ahead for your variable income and expect that some clients will (probably) pay late. Make a budget so that you can manage irregular cash flow, working backwards from your expected monthly expenses, and figure out what you need to make in gigs in order to meet those costs. Include room for estimated taxes and savings, the goal being to build up a minimum of six months’ worth of savings. Gigs come and go, and sometimes, no matter how hard you hustle, you may experience some lean months. Having an emergency fund will be crucial to keeping your debt-to-income ratio low and surviving those periods of work scarcity.
Find Out How YOU Work Best
Take some time to experiment and find out what makes you most productive. Do you get more done in a coffee shop, library or office space instead of at home? Are you more focused in the morning, afternoon or at night? Does background noise or music invigorate or distract you? Construct your working space and time so that the elements of your surroundings help bring out your best. List your goals, preferences and priorities, and make it a point to design your environment around your vision of success.
Joining the gig economy means welcoming freedom and flexibility into your life, but it also requires a greater degree of self-discipline, initiative and adaptability. By combining your strengths with some basic business, marketing and organizational skills, you’ll be able to take advantage of this growing jobs trend and turn your gigs into a real living.
ContributorBeth Kotz is a contributing writer to Credit.com. She specializes in covering financial advice for female entrepreneurs, college students and recent graduates. She earned a BA in Communications and Media from DePaul University in Chicago, Illinois, where she continues to live and work.