According to a survey by T. Rowe Price, gig economy workers pay more attention to their money than traditional workers — 78 percent consider themselves more engaged with their money as a result of their gig lifestyle. Perhaps they know what the rest of us have suspected for a while: the gig economy isn’t just a buzzword or a trend — it’s part of the modern job market, and it’s here to stay. According to research from Intuit (the company behind Quick Books), the gig economy already comprises about 34 percent of the workforce and it’s growing strong. By 2020, 44 percent of workers in the US are expected to work a gig, either full-time, or as a way to supplement another job.
Typically, we focus on the downside of being a gig worker. Workers who are part of the gig economy are essentially freelancers; they’re independent contractors rather than employees. (Think Uber drivers, freelance writers and adjunct professors.) Gig workers don’t generally have access to employer-sponsored benefits, their income may be inconsistent and they may have a more complicated tax scenario than a person who works for a single employer. But their focus on their finances is something the rest of us can all benefit from. Here’s what they’re doing that the rest of us should emulate.
Check your accounts more regularly.
According to the survey by T. Rowe Price, 39 percent of gig workers check their accounts more regularly since joining the gig economy. “They are paying more attention because their income fluctuates, so it gives them the opportunity to think through what their spending priorities are, and be more deliberate,” says Stuart Ritter, senior financial planner at T. Rowe Price. For those of us who have regular, fixed incomes, we may not be as proactive about checking our finances as we could be — because we know the money is rolling onto our accounts every pay day. What would happen if we checked our balances more religiously, like several times per week? You might be able to see you’re spending too much money on things like eating out — and only if you scale it back can you save up for long-term goals.
Stay on top of your bills (aka, pay them off!)
Since joining the gig economy, 32 percent of workers say they’re more on top of their bills. Although everyone’s technique for bill-paying varies, one of the best ways to ensure everything stays on track is to get organized. If you still get your bills through snail mail, try putting a basket on your desk or in your living room to keep all your statements in one place. If your bills get sent via email, put them all in one folder so they are easily accessible and you won’t have to dig through the rest of your messages. Another way to help stay on top of bills is to set up automated payments — this way you won’t have to remind yourself to pay, it’ll always be done for you on the bill’s due date.
Take control of your retirement by investing.
Only 16 percent of gig workers have an employer-sponsored retirement plan, according to a study by Prudential. That means it’s up to them to take the reins when it comes to saving for retirement. Sixty percent of workers in the gig economy reported managing their own investments and 23 percent said they are more “hands on” with their individual investment accounts since becoming a gig worker, according to T. Rowe Price. Knowing and understanding how to manage our own finances is both empowering and invaluable — but how do you get started? While a savings account or CD at the bank are always an option, gig economy workers also have an option to open up an IRA or SEP IRA for retirement savings, which enables you to save up to $5,500 every year.
Understand job security is never a guarantee, and a little risk can have big payoffs.
When people accustomed to full-time work think of the gig economy, they may immediately feel that a 9-5 job would be more secure. But Diane Mulcahy, author of The Gig Economy, argues that no job is completely secure. “The reason people stay in full-time jobs even though they may want to leave is because they feel secure,” says Mulcahy, “but that’s not true, there is no job security anywhere.” Interestingly, millennials seem to understand this most — according to T. Rowe Price, millennials feel more secure being in the gig economy than they do in the the traditional workforce. “Millennials have grown up in a gig economy more than any other generation,” says Mulcahy. “They probably observed what happened to Gen Xers and Boomers in the 2008 recession and thought ‘Oh maybe that isn’t as stable as I thought it was.’” If security is the only thing keeping you at a job you hate, know that nothing is guaranteed — it’s okay to take a risk sometimes. For example, that side gig you’ve been thinking about could turn into the next multi-million-dollar idea. Don’t be afraid to try something outside your comfort zone.
With Hattie Burgher