Have you ordered a ride through an app like Uber or Lyft, or rented someone’s home through a service like Airbnb? The sharing economy is providing many opportunities for consumers to save money, and many are finding ways to earn an income. In fact, according to the latest COUNTRY Financial Security Index, more than half of Americans are using some sort of shared service, and a small number (3 percent) are making money.
If providing a service like driving, childcare, pet-sitting or home maintenance appeals to you; or if you’re thinking about renting your home to visitors, consider these simple steps before you upload your listing.
1. Review your insurance coverages
The COUNTRY Financial Security Index found that 3 in 5 people earning money through the sharing economy haven’t purchased additional insurance to cover them while they are providing a service, and 2 in 5 aren’t confident they’ll be covered should an accident occur.
As we all know, accidents happen. What happens if you’re in a car accident while driving for a service, or if someone damages your property while renting it? Talk with your representative to make sure you’re protected.
2. Research local and state regulations
Many cities and states have added taxes and regulations for those earning money in the sharing economy. Do your research to learn about the taxes that need to be paid, and inquire about your neighborhood’s rules on renting your home to visitors, as many housing associations are prohibiting owners from renting.
3. Estimate the cost of doing business
Running your own business costs money, and those considering providing a service should factor in the cost of maintaining and cleaning a vehicle or home. Don’t forget to include the costs for items like towels and sheets if you’re renting your home, or food and toys for the children you’re baby-sitting, etc. Estimate the costs and draft a budget that gives you a realistic view of your earning potential.
4. Create a plan for your new income.
Now that you’ve made a decision to earn money through the sharing economy, create a budget and a financial plan that has goals for that income. As you create your plan, remember that for some services, income can vary greatly depending on the season and demand.
Providing a service can be a great opportunity to earn money while being in control of your own schedule, and by doing your research you can protect yourself from the pitfalls of the sharing economy.