Is the Gig Economy an Effective Way to Make More Money?

Thursday, October 17, 2019, 6:00 AM | Leave Comment

The gig economy has been a hot topic for a while now. Everyone from potential full-time freelancers and contractors to those simply looking for a side hustle to pad the budget has gotten in on this newfound trend.

For so many people, though, the thing that holds them up is the concern over whether contract work is really worth it or not.

Often it boils down to one simple question: is the gig economy an effective way to make more money?

The short answer is “sometimes,” with the obvious disclaimer that you’re going to want to take several things into consideration.

Let’s break it down.

Is the Gig Economy an Effective Way to Make More Money?
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  • The (Not So) Glorious Gig Economy

    The gig economy is often spun as a thrilling, golden land of milk and honey. Those who manage to find their way into it bask in the glory of flexible work hours, the ability to work from home, and professional independence, in general.

    Anyone who’s actually worked in the gig economy, though, will likely disagree with this outlook.

    It’s not that this line of work is particularly bad. It can actually be an amazing way to build a career. The problem is the “it’ll make all your problems go away” mentality. The plain fact of the matter is, the gig economy isn’t necessarily easier than a normal job.

    In fact, along with all of the benefits, there are some important added responsibilities, too. You’re going to want to keep these in mind as you go about figuring out if the gig economy is worth your while, financially speaking.

    Gig workers must take the time to think about things like:

    • Tracking deductibles.

    • Paying their own taxes.

    • Covering their own operational costs.

    • Covering their own benefits.

    Any one of these items can be expensive on their own. Taken together, they can make or break a freelance career.

    Take, for instance, the iconic modern part-time side hustle: becoming a driver for a rideshare service.

    If one day you decide that you’re going to register yourself with Uber and then head out on the town in search of some easy extra cash, there’s a decent chance you’re going to be disappointed with the take-home pay.

    It’s not that Uber drivers don’t bring in significant income. Even after Uber’s cut is deducted, many drivers can bring in hundreds of dollars in a day — if they work hard, at least.

    The problems arise when you begin to take into account the true costs associated with the part-time profession.

    For instance, an Uber driver often has to take into consideration added costs like:

    • Commercial insurance — private policies hardly ever cover ridesharing.

    • Vehicle maintenance — remember, you’re adding quite a few more miles onto that car.

    • Fuel — countless extra hours spent driving can add up to quite a bit more money spent at the pump.

    • A working smartphone — you can’t have that Uber or Lyft app crashing on you mid-trip.

    There are other factors to consider as well. Once you add them all up, the pay becomes dramatically less than it may have appeared at first glance. At the end of the day, the average income of an Uber driver dramatically drops from $24.77 per hour (before Uber’s fees) to a very low $10.87 per hour after basic fees and costs are deducted. And that doesn’t even take your healthcare into consideration.

    Now, Uber driving is still a decent way to bring in a little cash on the side if that’s all you’re looking for. The point is, it’s less than it appears and the gig does come with strings attached — in this case, a hefty dose of added responsibilities and costs.

  • How to Make the Gig Economy Worth It

    It’s important to point out, at this point, that not all gig economy jobs work out like the rideshare example above. In fact, some freelance jobs can lead to impressive levels of income. The important thing is that you weigh the income versus the expenses as much as possible before you start.

    We’re not just talking about the financial expenses, either. Here are a few most important things you’re going to want to consider before picking up a gig or two.

  • Make Sure You’re Financially Literate

    If you want to make the gig economy worthwhile, the first thing you’re going to need is a solid base of financial literacy. If you don’t know how to manage money well, chances are you’re going to end up stressed out on a regular basis.

    If you’re comfortable with things like tracking your costs and balancing income and expenses, you’ll be more likely to survive and thrive.

  • Keep Tabs on Your Work-Life Balance

    Are you a workaholic? Do you chronically procrastinate?

    Remember, working in the gig economy means you’re going to have to become the project manager in your own life and manage your work-life balance properly. Too much focus on one or the other can tank your side hustle before it ever gains any serious momentum.

  • Learn to Be Productive

    Productivity is the name of the game in the freelance world. If you typically have to rewrite an article 20 times before sending it off to an editor, for instance, chances are you’re going to make very little money as a freelance writer.

    Make sure you can produce significant quantities of quality work. You don’t have to be able to do that immediately, but an important question to ask is: can you develop that skill? Productivity is a key element when you’re being paid on a per project basis.

  • Show Me the Money

    The gig economy can easily appear either unrealistically profitable or impossibly unprofitable. Often it all comes down to your perception and expectations.

If you’re looking for a way to make easy money, chances are you’re going to be disappointed. However, if you’re willing to work on things like productivity, work-life balance, and financial literacy, you’re more likely to genuinely find a great source of income through employment in the gig economy.

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