3 Common Mistakes Gig Workers Make And How To Avoid Them
The gig economy has come a long way. Years ago, many would have dismissed it as a fluke. But today, the gig economy is not only surviving, but also thriving following years of amazing growth. While being your own boss in the gig economy has plenty of perks, it is not without its own set of concerns.
3 Common Mistakes Gig Workers Should Avoid
1. Missing CPF benefits
One of the most prominent ‘unsaid-but-definitely-not-unheard-of’ benefits is the CPF contribution. As a gig economy worker, you are your own employer. Thus, the onus is on you to diligently contribute to your CPF for your future needs.
However, the reality is that it is not uncommon to hear of cases where gig economy workers shun away from their CPF contribution. The danger of not having planned savings for your future needs can pose a major problem in the future. Plus, as a gig worker, you miss out on the employer CPF contribution of 17% and the 2.5% interest rate that CPF pays on your Ordinary Account (or 4% in Special Account). You are missing out a pretty good deal, if you ask us.
2. Living in fear of income instability
Income instability is a common fear faced by most freelancers since they are only paid for work they've completed. Despite the high earning potential and flexibility of their jobs, income instability is a recurring issue that threatens the peace-of-mind of most freelancers.
3. Forgoing medical insurance
Falling sick is a major ‘No-No’ especially because major illnesses can keep you sidelined for months. Falling sick means having to fork out your own medical bills and also losing your source of income during recuperation. Since gig workers aren’t full-time employees, the platforms they are working for are not obligated to cover them with health insurance.
3 Tips To Help You Avoid These Mistakes
1. Make your CPF contributions
Contributing to your CPF can be counter-intuitive, even if it sounds like the right thing to do. After all, CPF contribution is akin to “locking it up”. While the boundaries of utilising your CPF money can be restrictive, the concern is unfounded. You will (almost definitely) use it for buying your first home.
More importantly, making your CPF contribution lets you leverage on the power of compound interest. Did you know that by contributing $732 every month, you can save $100,000 in 10 years, thanks to compound interest? Check out how much more you can save with CPF when you make regular CPF contribution.
2. Transfer the risk elsewhere
One of the risks that gig worker face is third party liability. For example, when gig economy riders are en route to make a delivery, there is always a risk of an accident happening. Sometimes, things happen so suddenly in a few split seconds that you cannot avoid it. In the event of an accident, you face the financial burden of damages for yourself, your vehicle and sometimes the counterparty and his/her vehicle.
Instead of putting yourself at risk of such financial burden, gig workers can opt for third-party liability insurance. With third-party liability insurance, you can avoid the financial costs of getting into an accident.
Did you know that all foodpanda riders are entitled to free third party liability insurance? Learn more about it on the RideSafe page! (P.S. It’s legit).
3. Leverage on smart financial planning to avoid living paycheck to paycheck
Living by the next paycheck can affect not just the three meals of your daily life, but also to your future plans such as getting married. Leveraging on smart financial planning can help you avoid living by your next paycheck. Smart financial planning helps you plan ahead so that you think about future expenses and start saving for them today.
For example, saving plans help you grow your money and support you in achieving your financial goals. It helps you lay the foundation as you work towards financial freedom so that you can eventually live the life you want.