3 important things to consider when employed in the gig economy

Build up a substantial safety net, give yourself benefits, reduce non-deductible debt.

Ruth Saldanha 26 September, 2018 | 5:00PM

Working in the gig economy -- a labour market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs -- comes with certain freedoms. You're not tied to a desk from nine to five, you have the flexibility to pick the work you want to do, and you have the freedom to work with whomever you want.

Gig work is so attractive that Canada's labour market is shifting from permanent employment to gig work as "the new normal," says a BMO Wealth Management report. According to Statistics Canada, temporary employment accounted for nearly 20% of employment gains from 2016-2017 to 2017-2018, and growth in temporary work has outpaced permanent employment since 1998-1999.

However, gig work also comes with a unique set of challenges. Key among these is variability of cash flows, uncertainty of income and a lack of employer benefits. To meet these challenges, gig employees need to plan differently to financially insulate against these risks.

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Ruth Saldanha  Ruth Saldanha is Senior Editor at Morningstar.ca

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