In the midst of the coronavirus crisis, freelancers across the country are worried about more than just their health. From independent contractors and gig workers to project-based workers and part-time hires, freelancers in the United States are already feeling the financial strain and, in order to weather this crisis, must take steps to protect themselves.
Even before the World Health Organization declared coronavirus a global pandemic, many companies prioritized the health of their full-time employees and encouraged them to work from home. Thanks to various resources and protections, the transition to a remote working environment took place with relative ease.
Despite making up 35% of the working population and driving $1 trillion in income, freelancers find themselves in a very different situation. While state and federal governments are stepping in to help businesses and employers, many self-employed individuals feel alone in their struggles to make ends meet.
If you’re a freelancer feeling the financial impact of the coronavirus, worried about job security or wondering how you can steel yourself against future crises, there are actions you should take to protect yourself.
Pick Up a Second Job
Many freelancers already have a side hustle or two, but to protect against crises like coronavirus, it’s a good idea to further diversify your income streams. You don’t want to fall into the freelancing trap of working for too few clients. Fortunately, some of the best second jobs can be done from home such as teaching English online, blogging and transcribing.
If you take on an additional job or client, remember to never work without a contract. Contracts are essential for protecting freelancers from fraud, and especially during a crisis, you want to make sure you’re going to receive payment for the work you do.
Finding a second job or fulfilling changing client needs may require adjusting your skillset. Money contributor Giulia Pines encourages freelancers to brainstorm new ways to help their current client base. It may even be possible to put a coronavirus spin on a new service, such as writing a COVID-19 developments newsletter to reassure your client’s audience.
As you’re adjusting your skillset, look for free courses online. A slowdown in client work doesn’t need to mean hitting pause on your business. Pines suggests using the extra time for planning and training that can benefit you in the long run. The more skills you have, the better chance you have of weathering future downturns.
Know Your Rights
Unlike full-time employees, many freelancers aren’t eligible for company benefits. However, there is a way for freelancers to get unemployment pay for work lost to coronavirus.
Under the federal CARES Act, self-employed individuals and independent contractors are entitled to unemployment insurance coverage. If you’re available for work but unable to do your job due to the coronavirus outbreak, you can claim unemployment through your state
Furthermore, freelancers and self-employed individuals qualify for economic assistance payments. If your adjusted gross income was $75,000 or less on your 2018 or 2019 tax return ($150,000 for couples), you will get the full amount of $1,200 per filer ($2,400 per couple).
In addition to unemployment benefits and economic assistance payments, the Coronavirus Response Act provides freelancers and gig workers with a tax credit equal to two weeks of their average pay. They are also eligible for 12 weeks of family leave at 67% of their normal pay.
Have an Emergency Fund
Like many freelancers, it may give you some degree of relief to know the federal government is stepping in to help, but you’d likely feel even more secure knowing you have an emergency fund in place. It’s that sense of full control over your own life that likely drew you to the power of the gig economy in the first place.
Ideally, you should have an emergency fund with three to six months’ worth of income in the bank. Regardless of the balance in your savings account, you should evaluate your finances and cut back on your expenses wherever possible. And you should always keep in mind when quarterly taxes are due.
Many freelancers may be tempted to dip into their retirement accounts early, but because that can mean big withdrawal penalties, you should look into other options first. Connect with support groups and networks. There are myriad free resources and financial resource options available for freelancers across industries in the United States.
From New York to California, the coronavirus crisis is impacting freelancers and gig workers everywhere. While there are some protections for self-employed individuals, freelancers should take their own action to protect against future crises. Picking up a second job, knowing your rights and having an emergency fund are a good place to start.