- Guest Contributor
- July 5, 2022
Whether you’re taking on gig work as a side job or full-time hustle, you need to stay financially savvy every step of the way. Otherwise, you could get caught off-guard by the ins and outs of the world of independent work. Fortunately, we’re here to help. Simply use this guide to learn all you need to know about becoming a money-smart 1099 worker.
Plan for Irregular Income
Unlike a regular 9 to 5 job, gig work often ebbs and flows, keeping you moving between feast and famine. So, when things are good, you need to sock away as much money as you can for the lean times. If you don’t, then you may find yourself working double time just to get by.
On top of that, it’s best to minimize your fixed expenses as much as possible. Build your budget around your leanest month, and then you know you’ll make it just fine when your earnings slow to a trickle.
Don’t forget to explore new side gig opportunities on a monthly basis. Even when you’re raking in the cash, it’s good to know where you could get your next paycheck. That way, you’re ready to hit the ground running when the work dries up.
Save for Your Taxes
When you work an hourly job, your employer steadily takes money out of your check to pay your taxes. Plus, they pay half of your social security and Medicare taxes. As a 1099 worker, however, you are on the hook for all of it.
So, to ensure you’re ready for big tax payments, you’ll need to save about 30% of every gig work payment you get. Furthermore, if you expect to owe at least $1,000 in taxes, you’ll need to file quarterly tax payments. If you don’t, then you’ll undoubtedly get hit with penalties that eat into your earnings even more.
Create an Emergency Fund
Even when putting money away for lean months, you need a dedicated emergency fund on hand just in case things go awry. A solid emergency fund comes in handy if your car breaks down, for example, or if you need to find housing ASAP. Beyond that, it’s good to have just in case an illness or injury takes you out of the workforce for an extended period of time.
Ideally, your emergency fund should cover at least six months of your average expenses. But, start small by trying to get at least $1,000 saved for any unexpected expenses that come up. Then, keep the fund slowly growing by adding to it every time you get paid. Even 5% of each check can go a long way in keeping your savings moving in the right direction.
As you use these three tips, you can move forward with confidence that you’re financially savvy enough to make it big as a 1099 worker. You can then focus on building your empire and pushing your earnings higher and higher each month.
Ready to Get Started?
About the Author: Marie Abendroth is a skilled content strategist and SEO copywriter who has been a proud part of the gig economy for over 10 years. In her articles, she aims to provide up-to-date info that can help everyone achieve their goals as an independent worker. You can find her on WritersAccess.
