4 smart ways for gig drivers to handle finances

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Making money is one thing, and handling it quite another. No matter what you do for a living, taking care of your finances is important, but when you’re a driver, it’s even more crucial. As an independent contractor, there’s no big company there to take out your taxes, monitor your earnings, or provide easy access to your funds. There’s a lot to think about.

Obviously, you’re busy enough driving and delivering. And, even though you can probably out-map your GPS when you’re out on the road, when it comes to the issue of finances, you need some help with navigation. That’s why we’ve put together this blog post about managing your money in the gig economy. Here’s what we’ll cover:

  • Why gig driver finance is different
  • The gig driver’s wish list – financial tools drivers need
    4 ways for drivers to handle finances…wisely!
  • Great resources for gig workers: the perfect independent contractor app

Why gig driver finance is different

Without that steady employer, and the predictable income that might come with it, you have a lot to take care of. You need to figure out how much you owe in federal and state taxes, where and when to pay them, how to deal with savings, and how to manage your monthly budget.

We can pretend, and say we all came right out of high school knowing how to do these things, but that’s not always the case. Most of us were probably texting under our desks or gazing into space when teachers or parents brought up topics such as banking, taxes, and the importance of having savings.

Now that you’re part of the gig economy, you have to pay attention to how much money you’re earning, and what you need to do in order to set up a solid financial future. For instance, do you know how much money you’re really making per hour? Have you thought about your expenses? What might happen if your earnings get skimpy for a week, or a month? Do you have a financial cushion to fall back on?

The gig driver’s wish list: financial tools drivers need

Gig driver finance is unique. You need to think about things that your W-9 employed friends don’t. Here are a few things to get you started:
Guidance on quarterly taxes. If you make more than $1,000 as an independent contractor (and as a driver, you most likely do!), then you’ll have to file estimated federal and state taxes that will count toward your total tax bills, normally due on April 15 of the following year. You’ll need to find out how much you should file, when the payments are due.

A way to put aside savings. With tax bills coming at you four times each year, you’ll have to ignore the temptation to cash in any extra earnings on sweet new gadgets and wild nights out. Most wise financial advisors say you should also have an amount equal to at least one month’s expenses set aside for emergencies. When you don’t work, you don’t get sick time or vacation pay. You need to save to cover these situations, as well as any emergencies that might arise.

Tools to maximize tax deductions. You probably already know that expenses such as fuel and mileage are tax deductible, but are you aware of all the expenses you can exclude from your taxable income? Expert help with tracking deductible expenses could offer you big savings on your tax bill.

Mobile banking. You’re almost always on the go, so stopping at a bank, even if it’s an ATM, can grab up a significant amount of your precious time. The bank you choose has to offer the ability to get account info and make deposits right from your smartphone.

A fund for retirement. Unfortunately, gig economy jobs don’t come with retirement funds. That means you have to set aside money, and either invest it on your own or put it in a retirement fund. You can set up an Individual Retirement Account, or a Roth IRA. Both have tax advantages, and they also will be there for you when you’re ready to park your vehicle for good.

There are probably more things you can put on your wish list, but this is a great start. Now that you know what you need, let’s look at ways you can obtain it by learning how to manage your finances.

4 ways for drivers to handle finances…wisely!

#1 Learn how to budget with a variable income.
The first step toward wise budgeting is knowing exactly how much money you need to cover expenses for every month of the year. When there are taxes, car insurance, home heating or air conditioning, vehicle registration, and other seasonal charges in your life, you need to know when they’re coming. Next, you’ll want to figure out your average monthly income. Look at last year’s earnings, or as many months as you have so far this year. Remember to include debt repayment in your monthly expenses, including student loans and credit cards.

#2 Create multiple streams of income.
One way to get around the “now you’ve got it, now you don’t” unpredictability of gig driver income is to diversify. If you do mostly food delivery driving, business can get slow over the holidays. Pick up a gig delivering packages, or switch to rideshare for at least part of the time. When money comes in from more than a single source, you’re almost never left without at least some kind of decent cash flow.

#3 Spend less and save more. Get in the habit of meticulously recording your business expenses, and your personal spending. Find ways of cutting back on extras, such as feeding yourself good, nutritious food from home while you’re driving. You’ll be healthier than you would be eating burgers, fries, and shakes all the time. You’ll have more money left to work with when the bills come due, too.

#4 Use apps for self-employed drivers. The rest of the world, even banks, have become so used to the gig economy, they’re going out of their way to serve the needs of drivers like you. Look for apps you can use to help you record and categorize your expenses, set aside money for taxes, help structure your savings habits, and show you how well you’re doing.

Great resources for gig workers from the perfect independent contractor app, indi® 

If you’re wondering how you can get a leg up on handling your finances as a gig driver, we have a great answer for you. The indi banking app is designed to serve the needs of independent contractors – gig drivers like you!

It lets you make deposits so you can save toward your quarterly taxes. You can also track your purchases and expenses to make sure you’re getting the maximum when it comes to tax deductions.

There’s more, including:

  • A personalized tax savings goal: You tell indi about your income, and indi calculates the estimated amount you should have prepared to cover federal and state taxes.
  • A single account with two categories. Your indi account lets you see your bank balance in realistic terms, namely, what’s okay to spend, and what you need to save for taxes.
  • Instant and automatic savings for taxes. When you set up direct deposit to fund your indi account, you can designate a percent of each deposit to tax savings.
  • Access to all your money, when you need it. Even if you have money set aside for tax savings, you can still use it if you need it. When you do, indi will alert you and increase the amount deducted until you replenish your tax saving account.
  • The indi card. Your debit card can be used for work and personal purchases. You can categorize your expenses as soon as you use your card.
  • Receipt capture. Upload receipts directly to indi, so you don’t have to scramble for papers at tax time.

You get all of this, plus tax payment reminders, tips, and real-time notifications. Plus, there’s no fee for signup, or a monthly service fee. You don’t have to keep a minimum balance, and there are no overdraft fees.

The indi app might not get you everything you want, but it’s a great tool that will get your financial life rolling in the right direction.

 Learn more and get started with indi today!

 

1 indi is a prepaid account. Your funds will be held at PNC Bank, National Association and are eligible for FDIC insurance, subject to FDIC insurance coverage limits. A supported mobile device is needed to use the mobile app. Standard message and data rates may apply.

2 indi’s Tax Savings Goal feature is not a substitute for individual tax planning or for legal, financial, or tax advice. This feature is intended only as a tool to provide a basic sense of your potential tax savings needs. Because indi will not know everything about your finances or your personal situation, your Tax Savings Goal may be more or less than your actual tax liability. The Tax Savings Goal does not account for local taxes.

3 Using funds designated as Tax Savings for other spending may leave too little money to pay your taxes.

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