It doesn’t matter if you spend your days working on a laptop at home in your pajamas, selling your DIY goods online, or driving around passengers you pick up via a rideshare app, you’re part of the gig economy.

For a growing number of people, foregoing a conventional 9-to-5 schedule for flexible hours and the freedom to work on a variety of projects is a professional dream. However, there are a lot of complexities to the gig economy — including the fact that you’ll have to cover a lot of the benefits you’d normally get from a large company while on an income stream that may be inconsistent at times.

Navigating the freelance life will take some planning. Here are six to-do's that can help your finances as you go from full-time employee to full-time side gigger.


If you haven’t got your health, you haven’t got anything — so you should make this your first order of business. Assuming that you can’t get on a spouse’s plan or extend your previous job’s coverage via COBRA, you’ll need to sign up for your own health insurance policy. You can do this through, where you’ll be able choose from a variety of plans that are available in your area. You may also be able to find cost-effective group health plans via professional organizations or freelancers’ unions. Shopping around for the most affordable policy that fits your needs will be time well spent.


Whether you have a few big clients or are constantly hustling for work, a common downside to working in the gig economy is that your income will fluctuate. Having an emergency fund will allow you to cover your expenses if you have a slow month or an unexpected bill takes you by surprise. While saving six months’ worth of expenses is common, you might want to save a little more to handle larger fluctuations in your income.


As a full-time employee, you were used to receiving one W-2 form every year from your employer. Now, you’ll likely receive a 1099-MISC form from everyone you worked for (unless the amount is less than $600) or a mix of 1099s and W-2s, depending on the type of freelancing you’re doing for a company.

Another big change: Get ready to pay your estimated taxes every quarter. Otherwise, you could owe late fees and a big bill when you file. (If you do end up owing more than you can pay come tax season, you might be able to qualify for a monthly payment plan.)

As an independent contractor, you’ll be paying your taxes directly to the IRS, so you may be surprised by some additional taxes. For example, when you’re self-employed, in addition to covering your normal income tax, you’ll also need to pay a 15.3 percent self-employment tax to cover Social Security and Medicare taxes. The good news is that you may be eligible to itemize deductions that are available to freelancers, including a new deduction for pass-through businesses that was implemented when the new tax-law changes were introduced.


Speaking of tax deductions, you could get a tax break on the equipment and services you use to do your work — but first, you’ll need to purchase them. Make a budget for the things you’ll need to buy to conduct business and keep all receipts for tax purposes. This could be anything from a laptop to printers to software, along with any monthly bills you need to pay to get the job done. Also, keep in mind that technology can quickly become outdated, so consider budgeting to update your technology every three to five years.


When it comes to retirement planning, you won’t have an HR department inviting you to join the company’s plan. The good news is that you might have more options than you think to build your retirement nest egg; here are some of the most common ones. (All of these plans have IRS-specified contribution limits, so make sure you stay on top of how they may change from year to year.)

A Traditional or Roth IRA. These individual retirement accounts are the most common tax-advantaged vehicles that you can use to save for retirement on your own. With traditional IRAs, your contributions help lower your taxes today, but you'll pay taxes when you make withdrawals in retirement. With Roth IRAs, your contributions are made post-tax, but your withdrawals will be tax-free in retirement.

A Solo 401(k). Also called a one-participant 401(k), this retirement vehicle is for sole proprietors with no employees.

A SEP IRA. SEP stands for a simplified employee pension, and you can contribute to it if you have few or no employees. Up to 25 percent of your earnings can be contributed to the plan, up to an IRS limit.

A SIMPLE IRA. Meant for small businesses with fewer than 100 employees. You can put net earnings into the plan up to an IRS-specified limit.

A Health Savings Account (HSA). HSAs provide a tax-advantaged way to save for health care costs, but what a lot of people don’t realize is that you can use HSA money for non-health-care costs as well once you hit age 65 without penalties (the withdrawals will just be taxed as ordinary income). To open one, you have to have a high-deductible health plan.


As an independent contractor, nobody will cover your bills if you get sick for an extended period of time. Disability insurance can help replace a portion of your income if an injury or illness prevents you from working. To get it, you will have to prove your income through previous tax returns and your premiums will be determined by various factors including your age, your health and how much coverage you want.

Business insurance may also be a good idea to protect yourself from various work-related liabilities and risks, but there are a lot of different types of business insurance, so consider talking to a financial advisor to determine what type of coverage is most appropriate.

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