5 ways gig workers can prepare for a change in income


As the coronavirus spreads, some Americans are anticipating a change in, or a loss of, income. During a time of uncertainty, it can be difficult to know how to continue saving and earning while also curbing spending. 

Layoffs have already started: For the week ending March 14, jobless claims climbed to 281,000, up 33% from the prior week, according to data from the Labor Department. This week's jobless claims may show a spike of 2 million, chief economist Ian Shepherdson told CNBC on March 19, and some economists forecast that by April, job losses could range anywhere from 500,000 to 5 million.  

For many gig workers, better known as contracted or temporary workers, who depend on multiple streams of income, this period could be particularly challenging. Having funds dry up can have a significant impact on your ability to pay bills, pay off debt, and plan for the future.

Here's how gig workers can adjust to a shift in income, according to two financial planners:

Revisit your budget or 'spending plan'

This is a good time to adjust your spending in order to give yourself a financial cushion. First, though, you have to become familiar with how you usually spend your money. 

"It is a really great time for people to sit down and really track what their typical spending has been," says Ellen Rogin, a certified financial planner, and co-author of the New York Times bestseller "Picture Your Prosperity: Smart Money Moves to Turn Your Vision into Reality." "Most people don't track that. It's kind of a pain in the neck to look at. But they would have the time now."

Instead of using the word "budget," Rogin prefers the term "prioritized spending plan," or a strategy to help you divvy expenses into three categories: Priorities, fixed expenses, and variable expenses. 

Your priorities are the expenses you think you cannot live without. Your fixed expenses include rent, mortgage payments, car payments, and cellphone payments, and your variable expenses consist of your "wants" like clothing or entertainment. 

How reverse budgeting can relieve money stress

Video by Courtney Stith 

Shaving off a few of your optional expenses to reduce your monthly spending can help you build better saving habits down the line, too. By going without certain products or services for awhile, you may gain perspective on which expenses you consider "essential." 

"It may set the stage for making different decisions once things settle down," says Rogin. "Maybe they're like, 'Oh my gosh, it's so great to eat at home, I'm losing weight, I'm feeling more healthy, I'm not gonna eat out as much once things get back to normal.'" 

See if you can lower your fixed costs

In some cases, fixed costs, and even big-ticket expenses, can be negotiated, Rogin says.

Try calling your cellphone provider to see if they can lower your bill, or call your utility company to see if they're waiving any late payment fees for the next few months due to the economic effects of the coronavirus.

Larger monthly expenses like your rent or mortgage may be negotiable, too. Renters across the country are reaching out to landlords to see if they can work out some kind of deal on rent. Nina Job, a hairdresser in Queens, New York, who has had to close her salon due to the coronavirus, plans to negotiate rent with her landlady to make her payments more manageable and also see if she can pay rent in the middle of the month, rather than on the first. 

At the national level, there's some relief for struggling renters and homeowners. President Donald Trump said Wednesday that the Department of Housing and Urban Development will temporarily suspend "all foreclosures and evictions" through the end of April. 

See if you're eligible for benefits 

"If you've lost your job and you're a W-2, check with your state unemployment office. You may be eligible for benefits," says Marguerita Cheng, a certified financial planner and the CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. "If you're part of the gig economy and you have been affected, as many have been affected, look into how your state is responding." 

As part of the coronavirus relief efforts, many states have put mandates in place to ease the financial burden of the virus on residents' incomes, such as breaks on utilities or housing costs, and a potential stimulus bill that would provide checks to every American adult. 

Cities across the U.S. have taken actions to suspend utility rules so customers who can't pay their bills won't be disconnected. Check in with your state's benefits website to see if you might be eligible for any relief.

In addition, the government has given states the authority to expand unemployment coverage to workers whose jobs have been affected by the virus. That includes some contract workers, part-time workers, and others who aren't on payroll. You may also be eligible if your employer temporarily shuts down due to the outbreak and you intend on returning to work, or if you left your job due to a risk of exposure. So double check to see if you're eligible for unemployment benefits. 

Again, it never hurts to pick up the phone and explain your situation or ask for you what need. Cheng suggests reaching out to your cellphone provider, cable company, credit card company, auto loan servicer, and other providers to ask if they intend to offer any relief for their customers. 

"It might be overwhelming to have to make all of these calls, but just call people," says Cheng. "As a nation, people know that there are people hurting and suffering."

Find safe ways to keep earning

Nearly half, 48%, of millennials and 39% of Generation Xers say they have a side gig outside of their primary job, according to a 2019 Bankrate survey of 2,550 adults. And 3 out of 10 respondents say they use the money they make to pay for regular living expenses like housing and food.

"There are tons of very important tasks that can be done virtually," says Cheng. A few of these include virtual assistant jobs, freelance writing and editing, and tutoring for a remote learning program. On sites like Lessonface, for example, tutors can earn up to $60 per hour.

Try to find something that you enjoy and that aligns with your skill set. You might find that a remote side hustle you like and are good at could turn into a lasting gig. 

There are tons of very important tasks that can be done virtually.
Marguerita Cheng
CEO of Blue Ocean Global Wealth

Cut back on the amount you save

One way to ease your financial strain is by cutting back on the amount you're saving, says Cheng.

"If you're able to pay your bills and maintain your standard of living, still maintain that," she says. "But if you are a little bit nervous and you feel like you need to stash more cash, perhaps it's appropriate to cut back while still participating in the market." 

During a crisis, you may consider dipping into your 401(k) or other retirement account, but experts say this should be a last resort. Withdrawing money from your retirement accounts means that you may incur penalties and have to pay taxes — and borrowing from your future self means you'll lose the opportunity to grow and compound your money over time.

Make sure you're prioritizing your mental health 

Rogin emphasizes that while you're finding ways to adjust to a new financial situation, it's important to pencil in time to focus on your mental health. It can be challenging to make sound financial decisions when you're feeling stressed out or dealing with uncertainty, she says.  

Exercising, getting outside for a few minutes each day, and practicing meditation are all effective ways to keep a clear mind, she says. 

"You cannot access the executive functioning in your brain when you are fearful, and here we have a double whammy of being fearful about your health and your wealth at the same time," says Rogin. "One of the most crucial things people can do for their health and their financial decision-making is to have some kind of self-calming strategy."

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