7 ways to help gig workers reach financial stability

Today's gig workers — an umbrella term covering freelancers, contractors, fractional and solo entrepreneurs — comprise a notable portion of the U.S. labor market. Although estimates vary, Gig Economy Data Hub found that 41 million Americans were engaged in some form of gig work in 2024, and that for more than 10% of them, such work represented the primary source of their income.  

Gig workers are generally considered to be self-employed, meaning they are responsible for their own taxes, benefits and business expenses. This classification allows them to enjoy autonomy and flexibility in their work. However, it also means they face unique challenges due to fluctuating income, lack of employer-provided benefits and the need to more carefully manage their financial planning and stability.

READ MORE: Gig workers unaware of lower 1099-K threshold

Advisors serving such clients face challenges as well. Gig workers' often irregular income streams can make it difficult to create a stable financial plan. Analyzing cash flow and income patterns of clients who are new to the gig economy can be particularly tricky, as it may take a couple of years to accurately assess their financial situation and establish a reliable income pattern. 

While advisors must always prioritize their fiduciary responsibility to the client above other considerations, they must also be mindful of their own bottom line.

Typically, financial advisors create plans for clients with a minimum of $100,000 in assets under management. But when it comes to serving freelancers, contractors, fractional and solo entrepreneurs, I've found the sweet spot is $250,000 or more in AUM. 

Such clients can be found among gig workers who act as chief financial officers, chief marketing officers, social media managers, graphic designers and business development managers. By maintaining a well-rounded portfolio of clients, advisors can provide high-quality service without being overly reliant on any single client segment.

Here are seven areas where advisors can effectively support self-employed clients.

Variable income

To help clients create a budget that accounts for fluctuating income and expenses, calculate monthly fixed expenses. Ensure these are covered by having the client set aside a portion of earnings during high-income months. 

Advisors may use a budgeting app to track and categorize expenses, helping to identify areas where spending can be adjusted.

Emergency savings

Emphasize the importance of building a robust emergency fund to cover unexpected expenses. Set up an automatic transfer to a high-yield savings account to build the fund, which should ideally represent at least six to 12 months of the gig worker's  living expenses. Adjust periodically to account for inflation and changes in expenses. 

Tax planning

Have clients contribute a percentage of each received payment to a separate tax account to cover estimated quarterly taxes. Educate clients about the tax deductions available to self-employed individuals. 

Advise them to keep detailed records of their income and expenses and to work with a tax professional to identify eligible deductions and credits.

Retirement planning

Help clients determine the most appropriate retirement savings strategy based on their income and goals. Then assist them in setting up retirement accounts like SEP IRAs or Solo 401(k)s and encourage them to make regular contributions to stay on track.

READ MORE: The best retirement plan for self-employed clients

Health insurance

If eligible, clients should consider opening health savings accounts to save pretax dollars for future medical expenses. 

Also educate self-employed clients on their health insurance options in regard to ensuring coverage and obtaining the best rates. These options can include marketplace health insurance plans or joining a spouse's plan. 

Business expenses

Encourage clients to track and manage business expenses to maximize deductions and minimize tax liability. Recommend they use accounting software or apps to track all business-related expenses and categorize them for easier deduction at tax time.

SMART financial goals

Finally, work with clients to create SMART — specific, measurable, achievable, relevant and time-bound — financial goals. Review progress toward these goals twice a year to stay on track and pivot accordingly.

By addressing these key areas and staying ahead of the evolving independent labor market, financial advisors can build strong, trusting relationships with self-employed clients. As the workforce evolves, so must financial planning, ensuring nontraditional workers achieve stability and success on their own terms.