The U.S. job market continues to be disrupted by the rise of the gig economy, as millions of Americans tap into this type of work as a main source of income or to earn extra money. And in some cases, gig work is helping people to learn new skills in different sectors. There are many reasons why you may be interested in the gig economy. Or maybe you never quite planned on joining but have found yourself as a gig worker out of circumstance. Either way, it’s important to understand the benefits and potential tradeoffs that can come with gig work.
The pros and cons(iderations) of the gig economy

What is gig work?
There are many types of roles that fall into the “gig” bucket, but what they all have in common is that workers are not considered full-time employees, and do not receive a salary. Gig workers generally take on temporary, short-term roles and are often called contractors or self-employed freelancers. There are many types of gig jobs, from app-based gigs where your responsibilities and schedule may change on a daily basis, to longer-term contractor positions that look a lot like traditional roles.
Who are gig workers?
The gig economy is filled with all sorts of jobs. Here are a few different types.
Gig jobs
- Rideshare driver
- Dog walker
- Delivery driver
- Handyman
- Photographer
Contractor positions
- Carpenter
- Writer
- Administrative assistant
- Consultant
- Hair stylist
Unlike a salaried employee who receives a Form W-2, which indicates their employer deducted payroll taxes and withheld federal income tax, gig workers typically get a Form 1099-NEC after completing services for a company—meaning you are responsible for paying your taxes.
Whatever your reason for joining the gig economy, here are some important financial implications to keep in mind.
Compensation
Pro
The hourly rate for gig work often can be higher than similar, salaried jobs. Plus, in some contractor roles you may be eligible for overtime pay. And if it’s short-term, you may be able to overlap or complete many gigs each week.
Consideration
You don’t get benefits like health insurance. And what happens if you get hurt on the job? In most cases, gig workers aren’t eligible for workers’ compensation, unemployment or disability insurance.
What it means for your budget
Not only will you have to dip into your own pocket for health insurance, you will also have to contribute on your own to retirement accounts like an IRA—and you won’t have the benefit of employer retirement matching.
Taxes and expenses
Pro
Many gigs may pay you in full immediately, meaning you could have a healthy cashflow coming in.
Consideration
Taxes may not be taken out of your pay—but as a freelancer you still have to pay them and know how to pay quarterly estimated taxes to avoid penalties and interest. You’re also likely responsible for covering all work expenses like supplies and equipment.
What it means for your budget
If you don’t pay quarterly estimated taxes, you’ll owe a lump sum down the road and may be subject to penalties and interest. It’s important to establish a monthly budget as a way to manage tax payments with irregular income—and so that you don’t inadvertently deplete funds needed for essential living expenses. Some work expenses are tax-deductible. If you’re a rideshare driver, for example, you may be able to deduct some vehicle-related expenses like gasoline, insurance, maintenance and repairs.
Flexibility
Pro
You’re the boss—and that could mean more motivation and potentially more personal income. You have the freedom to choose when you work, where you work and for how long. Additionally, controlling when you’re on the clock could help you more effectively balance work with caregiving responsibilities.
Consideration
Your time spent hustling and networking to find new gigs is unpaid—and you don’t get paid for time off or your lunch hour. If you have to invoice your employer or client for work completed, you may need to wait 30 days or longer for payments to arrive. And if you’re signed up through ridesharing services or delivery businesses, you may have to pay a commission.
What it means for your budget
With irregular income and less job stability, it’s always a good idea to build an emergency fund. Not only will you want to develop healthy saving habits, but consider getting ahead on recurring bills should income dry up or work payments be delayed. Make sure you understand what sourcing work means, and when you’re calculating your potential earnings, factor in the company’s cut, too.
Variety
Pro
Available roles can be quite diverse, from technologically focused gigs to hands-on work, and, as a result, offer access to new career skills, which helps if you’re between jobs.
Consideration
You may be able to pick and choose your work, but because they are short term, you could be missing out on traditional career development opportunities like job training or mentorship programs.
What it means for your budget
If you have a full-time job, the on-demand economy can provide you with supplemental income. If it does, you’ll want to have a plan for that money: should you save for retirement? Pay down debt? Or save for a vacation? As a gig worker, it’s also important to invest in yourself. Consider upskilling, where you regularly learn skills that can help you perform your job better.
Work life
Pro
Without an office to get to, there are no commuting headaches and you could see some savings on monthly transportation costs.
Consideration
You can feel isolated and not part of a team at times, missing out on company culture and structure.
What it means for your budget
If you’re lonely and craving personal interactions, you may want to rent a spot in a shared office space for a monthly fee. If you’re in-between jobs, you may consider enrolling in an online course to learn new skills, gain experience in a different field and keep up with changes in technology.
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Bank of America and its affiliates do not provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.