- 60 per cent of Canadian small-business owners became self-employed by choice
- Boomers in the gig economy value autonomy and control; Generation X values their work-life balance
- BMO offers tips to achieve financial wellness while participating in the agile workforce
TORONTO, July 30, 2018 /CNW/ - BMO Wealth Management today released a report describing Canada's labour market shifting from permanent employment to on-demand temporary or contractual employment as "the new normal" – and the challenges and opportunities within this so-called "gig economy".
The Gig Economy: Achieving Financial Wellness with Confidence is based on a survey of more than 1,000 Canadian small-business owners. They revealed 40 per cent had or currently worked as self-employed professionals pursuing contract or freelance project-based careers.
"Since the global financial crisis in 2008, technology and automation have transformed just about everything we do," said Joanna Rotenberg, Group Head, BMO Wealth Management. "The new job economy has also changed the way Canadians save and invest. A change in the way Canadians hire or get hired means additional time and planning is needed for gig economy workers to achieve their financial goals."
The report reveals that while gig workers of all ages share some common benefits – and barriers to success – different generations also display some distinct outlooks.
Key survey findings show:
- Most small business owners became self-employed by choice (60%).
- Of all the respondents, 40% identified as being part of gig economy now or in the past.
- Popular reasons for taking contract work: to have autonomy and control (49%); make extra money on the side (49%); balance career and family needs (42%); or because it was the only way to make an income (27%).
- More Boomers were likely to value autonomy and control when taking freelance jobs (70%) or felt it was the only option at this stage to earn income (35%).
- Generation Xers valued balancing career and family needs more than other groups (52%).
- Millennials were more inclined to work in the gig economy to make extra money on the side (53%), or until they found a better job (30%).
Challenges of working in the gig economy
- Having no benefits, such as medical, dental or disability (69%).
- Not getting paid when sick (55%).
- Not earning enough (41%).
"While the freelance economy can be enticing and lucrative, offering flexibility and the option to work within one's specialty or have a better work-life balance, it comes with its own set of challenges," said Chris Buttigieg, Director, Wealth Institute, BMO Wealth Management. "BMO's financial advisors are available to help clients prepare for or overcome these challenges and meet their short- and long-term financial goals while participating in this growing trend in employment."
BMO offers the following tips to self-employed (gig) workers:
Have a financial plan: Consider a minimalist budget that ensures business and personal expenses do not get too intertwined. Managing expenses helps when income fluctuates. In good times one can add more to one's savings and emergency fund (three to six months'-worth of savings), while in a low income month, savings can be suspended or reduced.
Make a business plan: A business plan documents exactly what needs to be done to make money and aligns with one's personal financial plans. It can also address financial goals including retirement or college funding.
Save for other goals: Payments to retirement accounts like RRSPs and TFSAs can be automated to develop a consistent saving habit. However, it may be best to adjust it on a quarterly or semi-annual basis as your income fluctuates.
Be organized: Report all income to the appropriate tax authorities and make Canada Pension Plan contributions. Keep records of your income and expenses and get professional help with taxes if needed.
Get individual healthcare coverage: Invest in health and medical insurance coverage to get the treatment you need to take care of yourself even when the budget is tight.
Protect against risks: Your greatest asset is your ability to work and earn an income so it's advisable to protect your earning potential with a private disability or liability insurance plan.
Pay off debt and avoid it: It is easy to incur debt when income is low – if taking on debt is unavoidable, make sure to include payments in your budget.
To view a copy of the full report, which includes additional survey findings and financial tips, please visit: https://www.bmo.com/main/wealth-management/wealth-insights#wealth-reports
To work with a BMO professional to achieve financial wellness visit https://www.bmo.com/main/personal/financial-planning or a BMO Bank of Montreal branch near you.
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider – the 8th largest bank, by assets, in North America. With total assets of $744 billion as of April 30, 2018, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.
SOURCE BMO Financial Group