gig economy

6 Things Gig Economy Workers Should Do to Protect Themselves Financially

The gig economy has changed the way nearly 70 million Americans define work. But as a gig economy worker, you’re left to your own devices when it comes to finances. So what should you do?

1. Understand your taxes

Gig workers are classified as self-employed independent contractors. That means everything you earn (even if it’s cash or “under the table”) is subject to taxes. You’re also taxed more, because you’re not someone’s employee (corporations usually pick up 7.5 percent that you now have to cover).

From my experience and from talking with others, understanding taxes for independent contractors is the biggest hurdle gig workers face. It can also be the most damaging. To protect yourself, work directly with an accountant, and do what you can to learn the ins and outs of your tax responsibilities.

Related: Many Entrepreneurs Hope Gig Economy Leads to New Career

2. Save a percentage of every paycheck

Saving a set amount of every check is a good practice in general, but you first have to be able to cover your taxes. If you don’t report your income or pay taxes, you’re going to have a hard time with anything that pulls a credit report, like major purchases and background checks.

You’ll need to be able to pay for taxes, but since you’re self-employed, you’re the only one who can do this for you. Get with your accountant to see exactly how much you should set aside (though as standard procedure, you’ll want to do at least 10 percent).

After taxes, automatically set aside whatever else you can. This builds discipline, but also goes a long way toward building up your financial cushion.

3. Build up your emergency fund

As a gig worker, you might feel like there is a bottomless well of opportunity to make money, but you never know what could happen that costs you money.

The emergency fund is there just for emergencies, like if your car breaks down or if you become sick or injured. It’s there to cover unforeseen expenses.

As an independent contractor, it’s difficult to know for certain when your next assignment will come, and how much you’ll earn from it. How will you get by if there’s a lull between gigs and something bad happens?

Do what you can to set aside money for emergencies. The rule of thumb is to hold up three months worth of expenses. On the off chance you never need to use this fund, then you still have thousands of dollars set aside that can be used for other needs.

4. Diversify your workload

If you only do one job for one company, then you’re entirely dependent on that one thing. As an independent contractor, this is less than ideal. Generally, it’s never the best idea to leave all your eggs in one basket.

To diversify your workload, and better protect yourself financially, either perform the same job for different companies, or perform different jobs for different people.

For example, a writer would do well to work with clients directly, but to also find opportunities through platforms like BlogMutt, ClearVoice, Skyword, Upwork and others. A driver would do well to pick up rides for both Uber and Lyft. A handyman could have their own business, and also work through TaskRabbit.

When you’re able to do more as a gig worker, you will protect yourself financially (and probably make more, too).

5. Get the right insurance

If you value something, you take steps to protect it, right? Well, the three most valuable things you have are your health, income and reputation. So let’s protect those.

If the Healthcare Marketplace doesn’t float your boat, you can look into alternatives like Medi-Share, or work with a company like Stride.

If you can’t earn an income, you can’t support yourself. And since more than 10 percent of people experience a disability at some point in their career, disability insurance is needed to make sure you still have an income should you be unable to work.

Then there are other options, like ride sharing car insurance for drivers, and general liability insurance for everyone else.

Finally, life insurance can protect you and your loved ones (for cheap), should something happen to you. No financial plan is complete without insurance to protect things you value.

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6. Keep track of every penny you earn and spend

I don’t expect you to keep up with the ever changing (and growing) U.S. tax code, but I expect your accountant to (especially CPAs).

To help them help you save as much money as possible, keep track of every transaction in and out of your accounts. (Tools like Freshbooks and Wave make it easy). Your accountant will be able to sort your earnings and spendings appropriately, so you can deduct the maximum on your taxes.

When you save money on taxes, those dollars can go to things you actually care about. That means more money for living expenses, savings goals, personal investments (like education), and even vacations.


Self-employed gig workers are exposed to a lot of risk, but that doesn’t mean you’re in jeopardy. It just means there are measures you can and should take to protect yourself financially, like those listed above.

If you take time to protect yourself, you can have a very successful career as a gig worker, whether you do it for only a year or your entire working life!

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