5 Financial Benefits of Being a Long-Term Gig Worker

There was a time when being a gig worker felt like an option of last resort. Maybe someone lost their job or took on a gig as a side hustle. For some, gig work may still start out as a move of desperation, but for many, it's a way of life, and an ideal way to own a small business.

Being one of the estimated 73.3 million gig workers in the U.S. offers freedom and some pretty sweet financial benefits that are hard to deny. Here are five benefits of being a long-term gig worker.

1. Can cut down on travel expenses

Unless your gig finds you on the road a lot -- like working for a courier, babysitting, or as a handyperson -- there's a good chance you don't have a commute. For example, if you're working as a proofreader, graphic designer, or online tutor, the amount of time you spend in your vehicle may be greatly reduced.

After extensive data mining, Clover Real Estate found that the average commuter in the U.S. spends just shy of $8,500 annually on their commute. Depending on the job and how often your side gig takes you out on the road, working from a home office can save you a substantial amount of money.

2. Frees up time to earn money

Another thing Clover Real Estate's research found is that the average commuter in the U.S. loses 32 hours a year to traffic. Let's say you work as a freelance editor for $50 per hour. An extra 32 hours a year will bring in an extra $1,600.

3. Could reduce clothing budget

Depending on the type of job you had before going out on your own, it's possible you'll save money in the clothing department as well. Consider this: No one knows if you're wearing pajama bottoms when you're in a Zoom meeting or working as an online tutor. If you've started an answering service, all people hear when you pick up the phone is your professional voice.

The average American spends approximately $161 per month on clothing. Reducing how "dressed up" you need to be for a public-facing job can lead to a smaller clothing budget and may make you less likely to depend on credit cards to buy new clothes when you need them.

4. Ability to scale income

Working a traditional job typically means knowing precisely how much you will earn in any given year, minus commissions or bonuses. When you're a gig worker, you can decide if you want to take on more work and, therefore, earn more money. You can decide if you're going to push it hard nine months of the year so you can enjoy a lighter schedule the other three months. It's up to you.

Let's say you're a gig worker and receive a surprisingly high tax bill. Rather than stress, you can increase your workload long enough to put what you need in the bank to cover the added expense.

5. Access to supercharged retirement savings

If you've been working traditional jobs for years, you likely know the benefits of employer-sponsored retirement plans. But did you know that if you're a self-employed gig worker, you can open a Solo 401(k) plan? What makes a solo plan so attractive is that you -- as both the company owner and employee -- can maximize the amount of money you invest for retirement each year.

Including $7,500 in catch-up funds, an employee contributing to a company-sponsored 401(k) can contribute a total of $30,000 annually. However, that same over-50 employee can contribute up to $73,500 to a Solo 401(k), depending on how much they earn each year. The more you earn, the more you can contribute. What's more, you can even hire your spouse to work for your small business, and as long as they're earning money, the business can make contributions on their behalf.

Starting your own business as a gig worker can be scary, especially if you've never done it before. But then again, most worthwhile things in life have an element of "scary" built in. It's up to you to determine if the financial benefits and potential life balance make the risks worth it.