Brett Helling, founder of Gigworker.com and a rideshare driver since 2012, has shed light on the issue of income volatility. This term refers to the distinct change in a worker's annual income from one year to the next. According to a report by Pew Charitable Trusts, more than a third of Americans face up to 25% fluctuations in their income annually.

Income volatility is especially prevalent among gig economy workers, freelancers, and on-demand workers. It describes the extent to which earnings over a period vary from the average or how often a household's monthly income dips and increases within a certain period. This inconsistency can impact financial stability.

While sometimes these fluctuations can result in an income boost, more often than not, volatile incomes leave workers and their households financially vulnerable. Therefore, understanding how to mitigate the effects of this bumpy income ride is crucial.

Calculating income volatility varies based on available data and context. However, one popular method involves using standard deviation: Standard Deviation (σ) = √[Σ(xi – μ)² / N]. The final answer is indicative of the dispersion or volatility of the income; if it's high, there's greater income volatility, if it's low, the income is more stable.

Pew Trusts' report reveals that all demographic groups experience income volatility. However, it's more frequent among younger single-parent families of color and low-to-moderate-income families. Modern scheduling software used by employers allows for on-demand scheduling but offers minimal control over working hours for shift or part-time job workers.

This unpredictability makes it difficult for on-demand and gig workers to save money or plan ahead for unforeseen expenses. Moreover, gig work does not offer employment benefits as businesses do not consider on-demand workers as full-time employees.

However, there are strategies that workers can employ to better manage these swings in income. Diversifying clientele or finding consistent clients can help freelancers. Traditional job workers can supplement their income with a side gig. Even though saving may be challenging for low-income earners, setting aside funds for emergencies is essential.

Creating a budget and tracking expenses are also key strategies to manage volatile income. Conducting frequent income analysis using spreadsheets or income tracking tools can help identify trends and repeated patterns in income inflow.

A volatile income can sometimes force workers to seek alternative financial services like payday lenders who charge high-end rates. Payday loans are short-term, high-risk borrowing plans where the lender gives the borrower a high-interest credit on the premise that they get a portion of their next paycheck in return.