Why young professionals need serious money goals in the 'gig economy'

The latest Bank of America survey found that one in four millennials in the United States aged between 23 and 37 work in the gig economy, as opposed to the traditional nine-to-five labour model. Independent workers are also rapidly becoming the biggest group in the European Union labour market.

With an unemployment rate of 27.7%, South Africa is also turning to the gig economy for help. Websites and apps like Uber, AirBnB and Upwork have made it much easier for anyone to become an entrepreneur, with access to work on a global scale.

The rewards of working for yourself

Onalenna Disipi is a certified financial planner and independent consultant with the Discovery Group. "There's so much I want to achieve in my life," she says, explaining that working for herself helps her to account for her time. "When you're not doing so well one month you know you have to do something differently."

Disipi says that working for herself means that she can control her earning power to some extent. "Having life goals and the ability to work hard to achieve them motivates me tremendously to achieve more."

What are the risks?

While freelance or contract work offers many benefits, it can be a tricky environment to navigate. Amanda Arumugam, a senior associate at Bowmans, has been quoted by numerous sources on the risks that come with the gig economy. To summarise:

• For some, it's not a first choice, but a necessity.
• Your salary is determined by the work you find each month.
• You're missing out of benefits such as a pension plan, holiday pay, sick leave, unemployment insurance, or protection from unfair dismissal.
• There's a high level of uncertainty.

Why you need serious money goals

In a world of work that is characterised by its flexibility - and instability - it is more important than ever to safeguard yourself against the risks of working for yourself. That is why you need to have money goals around savings, investments and insurance.

Saving and investment

Certified financial adviser Claire van Wyk says the sooner you start saving for retirement, the better. You cannot discount the value of compound interest, and even a little bit from an early age will go far. "Pretend it's not your money," she says.

Discovery's Smart Suite for Young Professionals makes it possible to save from as little as R300 a month or a R5 000 lump sum - making it an achievable goal for gig workers. The flexible investment plan gives you access to your money whenever you need it.

The retirement plan comes with unique benefits such as boosters that help you grow your investment, fee optimisers that reduce your fee based on your Vitality status, and Discovery Protectors that look after your investment.

Insurance for a range of life-changing scenarios

Responsible young professionals, especially those working for themselves, need to protect themselves with:

1. Life insurance: What would you do if you got ill and could no longer work? Or if you had a car accident and you're unable to work for a period of time while you recover? Discovery Life, for example, offers some innovative solutions to keep you going:

• Discovery's Smart Life Plan from as little as R100 a month has an Income Continuation Benefit that keeps you covered if you can't work owing to injury or illness.
• Included on your Income Continuation benefit is the Promotion Tracker Benefit which increases your in-claim monthly payment every year by inflation and every five years by a further 10% to allow for promotions you may have received if you hadn't become disabled.
• The Travel Protector offers up to six months of cover if you take a sabbatical to go travel.
• Automatic Parent Funeral Cover of up to R20 000 on the death of a parent or step-parent.
• The Severe Illness Benefit comes into play in the event of cancer or other life-threatening illnesses.
• The Capital Disability Benefit covers you in the case of serious disability, as well as if your parents pass away.
• The Smart PayBack Fund allows you to get up to 100% of your Smart Life Plan premiums back for managing your health and wellness and for practising good driving behaviour.

2. Health insurance: By maintaining a healthy and active lifestyle, you can minimise the risk of illness or disability. Certain plans of schemes administered by Discovery Health place your wellbeing in your hands with the Discovery app. It gives you access to private hospital cover, comprehensive cover for chronic conditions, instant connectivity with a choice of over 100 000 doctors from anywhere in the world and extensive GP cover and emergency medical cover for when you're travelling outside South Africa.
   
   Scheme members also have access to the Vitality health programme. With Vitality, you get rewarded for your healthy living efforts, with weekly and surprise rewards for achieving your fitness or driving goals.

3. Short-term insurance: Freelancers need the following equipment to do their work: a car, internet, computer or laptop, and a cell phone. Being connected is of the utmost importance, so you need to make sure you have short-term insurance that protects your assets.

4. Wellness programme: Discovery Life and members of participating medical schemes administered by Discovery Health also have access to the world's leading science-based wellness programme, Vitality. With Vitality, you get rewarded for your healthy living efforts, with weekly and surprise rewards for achieving your fitness or driving goals.

So as you launch yourself into the gig economy - make sure you're financially prepared and making the most of every opportunity.

The information in this article is intended for general purposes only. If you have concerns about saving while self-employed, contact a certified financial planner.