In recent years, the landscape of employment has drastically shifted with a surge in side hustles and gig work among American adults. A survey from Bankrate reveals that over one-third of adults are engaging in side hustles, a trend particularly pronounced among Gen Z and Millennials, where nearly half are noted to be involved. On average, these side hustles generate around $10,700 annually, with popular activities ranging from furniture assembly to pet sitting. The financial motivation behind these ventures is significant; many side hustlers rely on this supplementary income to cover regular bills. Furthermore, gig work statistics show that approximately 57 million Americans have a gig employment arrangement, underscoring a growing trend wherein becoming a business-minded consumer, or “Bizumer,” is becoming the norm rather than the exception.
However, as enticing as the gig economy may seem, workers often face substantial challenges regarding their earnings and taxes. Gig workers who earn over $400 are required to file a tax return and navigate the IRS’s regulations on self-employment income. This can be daunting for many, especially considering that gig work typically brings about fluctuating earnings and varying access to credit. Traditional lending models, which usually favor steady income, can leave gig workers struggling to secure loans for expansion. Furthermore, without a structured approach to accounting, many side hustlers find it difficult to manage invoices, payments, and tax obligations effectively.
The rise of “Bizumers” presents unique opportunities for banks and fintechs to cater to this hybrid profile, blending consumer and small business needs. Financial institutions can respond by providing tailored financial management tools to help Gig workers manage their inconsistent cash flows, as well as offering structured support for tax preparation and accounting. Specialized credit products that leverage alternative data sources could also facilitate better access to loans and financial support. Additionally, with many gig workers lacking conventional benefits, banks can fill this gap by creating partnerships with insurance providers to offer health, liability, and disability insurance options, thereby serving the evolving needs of Bizumers more effectively.
Another area where financial institutions can make a substantial impact is through faster payment solutions. By integrating instant payment systems with gig platforms, banks could ensure that gig workers have immediate access to their earnings, a critical factor for those facing irregular income streams. For instance, the establishment of dedicated business banking accounts could also streamline the financial activities of those engaging in side hustles, particularly if their venture has evolved beyond a mere hobby into a more serious business endeavor.
To support these emerging Bizumers, two innovative credit unions have pioneered initiatives specifically targeting gig workers. Vantage Credit Union’s HUSTL program is an example of a digital financial brand tailored to the needs of freelancers, providing accounts with low or no fees, as well as tools that assist in tracking income and expenses while promoting automated tax saving strategies. Similarly, Members Choice Credit Union in Houston has introduced a Side Hustle Banking account featuring early access to direct deposits, which enhances cash flow for its members.
In conclusion, the rise of the gig economy and side hustles is ushering in a new era of financial consumers who operate at the intersection of personal and small business finance. These “Bizumers” are redefining what financial products and services are necessary for their unique situations. As their numbers grow and their financial complexities deepen, there is a vital need for the financial services industry to evolve correspondingly, providing innovative solutions that adequately address their needs, from flexible cash flow management to comprehensive tax support and essential insurance products. This shift not only benefits the workers but also offers banks and fintech companies rich opportunities to capture a segment that is poised to reshape the economy.