Want to Make Extra Cash in the Gig Economy? Here’s What You Need to Know

Nearly a quarter of Americans have tapped into the gig economy, thanks to what Pew Research calls “digital earning platforms.”

Yeah, it sounds fancy and technical, but you’ve probably encountered these platforms before: Uber, Etsy, Airbnb, DogVacay… you name it. It’s anything that digitally contracts folks to work flexible gigs.

So Pew released a study last week reporting 24% of Americans have earned money from this digital platform economy in the past year — and this growth isn’t expected to slow soon.

Sounds great, right? Well, there are pros and cons to this trend — plus many aspects to gigs you probably haven’t considered yet, but really should.

The Reality Behind the Growing Gig Economy

Snagging some income by using a digital platform is appealing on so many levels: flexible work schedules, side income, noncommittal terms…

However, Pew emphasizes that while 49% of “gig workers” consider the income “nice to have,” 56% consider the income “essential or important.”

Many who fall into the “essential” category say the work appealed to them because there weren’t any other jobs available — not because of the flexible schedule.

In fact, 25% of those who find the work essential say they work these gigs because of the “lack of other jobs where they live.” Also, 24% say it’s to gain work experience, which makes sense since another 52% say they have a high school degree or less.

In terms of demographics, 57% of those who find the work essential have a household income under $30K, and 36% are already employed full time.

So, while the gig economy might be appealing to those of you who deem the extra income “nice to have,” many rely on this type of work to get by.

What You Need to Know Before Joining the Gig Economy

As mentioned, these gigs are appealing, but consider the following before jumping right in.

I spoke with FlexJobs’ senior career specialist Brie Reynolds, who says the Pew study sheds light on this “prominent and still-growing phenomena.”

She says whether you choose to work as a free agent, a freelancer or somewhere in between, there are some best practices to first consider.

1. Don’t work without a contract.

For those looking to start earning money immediately, a gig is awesome.

However, be sure to set up a contract first. With established platforms like Uber and Airbnb, you’ll enter a contract when you sign up — just be sure to read the fine print.

For other work, though, it might not be so simple.

“If you don’t have at least a basic contract signed between you and the client, there’s a ton of room for issues to pop up,” Reynolds says.

All you need is something basic outlining each party in the agreement, the project and the agreed-upon price (plus timing of payments or anything else of the sort), as well as the deadline.

2. Find a few solid sources for gigs.

Consider multiple gig sources, especially if you’re part of that 25% who considers this work to be essential.

For example, if you drive with Uber, you could consider also signing as a Lyft driver. I know many drivers who do this. That way, if there’s a dry spell for Uber requests, you might be able to keep busy on Lyft’s platform.

If you’re a freelancer of sorts, the same concept applies.

“Finding freelance work can be stressful because you want to make sure you find high-quality, reliable clients, and not people or companies that don’t intend on playing by the rules,” Reynolds explains.

Relationships — and reliable job sites — are key.

3. Create a system for tracking your income and payments.

You knew this was coming…

This is important to be sure you’re getting paid fairly and accurately in a timely manner. Because you’re keeping track, you’ll be able to go your client and ask why you haven’t been paid (though hopefully this won’t be the case).

“Most of the time, clients don’t have nefarious reasons for failing to pay you on time, they just need a lot of reminding,” Reynolds explains. So just keep an eye on things and give a little nudge when needed.

Also consider that taxes might not be taken out of those paychecks. If they aren’t, you’ll need to file them yourself and make an estimated tax payment every three months. Don’t let this scare you — check out our freelancer’s beginner’s guide.

How to Get Started With Your First Gig (or Second or Third…)

We wrote about Pew’s original study earlier this week and gave you some ideas on where to get started in your “digital platform economy” search.

And The Penny Hoarder always loves a good side gig, so you’ll always see us posting flexible jobs on our Facebook jobs page.

Your Turn: Are you taking advantage of the digital platform economy? Tell us your story.

Carson Kohler (@CarsonKohler) is a junior writer at The Penny Hoarder. After recently completing graduate school, she focuses on saving money — and surviving the move back in with her parents.