Unlocking Financial Freedom in the Gig Economy

Unlocking Financial Freedom in the Gig Economy
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Once upon a time, a “gig” was simply a slang term used by musicians to describe their live performances, particularly favoured by smaller, emerging bands. However, the digital era has ushered in the gig economy, referring to short-term contract or freelance work, which motivates individuals to explore beyond their comfort zones.

Do you spend your days moving from one house to another, delivering meals, or perhaps dream of living the influencer life, creating captivating content for social media? Or maybe you specialise in freelance video production, if not aspire to run your own creative projects?

This is what we now call the ‘Gig Economy’.

Concurrently, we’ve seen the rise of the gig economy in Malaysia, with a growing population of full-time gig workers, a trend that shows continuous and steady expansion.  

Embracing the role of being your own boss not only gives you the freedom to set your work hours and preferred work style, but also the opportunity to pursue tasks you’re truly passionate about. However, it also means bearing sole responsibility for various aspects, particularly your retirement planning.

Why gig-workers need to prioritise retirement planning?

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Alongside the freedom and flexibility that comes with gig work, they often face various challenges, including: 

 

1. Irregular income 

Unlike traditional employees with set working hours, gig workers often face irregular work schedules, leading to unpredictable income. This unpredictability makes it challenging for them to estimate their earnings, highlighting the importance of actively setting aside savings for retirement.  

 

2. EPF contributions are not mandatory 

While many employees enjoy the safety net of mandatory contribution to retirement funds, gig workers and self-employed individuals are left to navigate their financial path. With no mandatory EPF contributions to rely on, they hold the responsibility of managing retirement savings and must proactively oversee their financial planning.

 

3. Limited perks and benefits 

Full-time employees usually receive benefits, including dental and healthcare insurance, from their company. As a freelancer, you’ll have to bear the responsibility of covering these expenses yourself. There’s also no such thing as a “paid vacation”, as you’ll have to decline certain projects and forgo income to take time off.

So, you’ve decided you want to take part in the gig economy. What can you do to manage your personal finances better?


How to manage your finances as a gig-worker?

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To begin, it’s important to set up an emergency fund, a financial cushion dedicated to covering unexpected expenses. Aim to save a portion of your income into a separate savings account until you have at least three to six months’ worth of living expenses saved up.

This ensures that you won’t have to take out debt or tap into your retirement savings when confronted with a financial emergency (e.g., unexpected medical bills, major car repairs, etc.). If your income fluctuates every month, a robust emergency fund provides a safety net, ensuring you can cover essential living costs during periods of low-income.

Once that’s done, you can start thinking long-term. 


Increase your savings in EPF via i-Saraan

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One of the easiest ways to grow your retirement fund is by increasing your savings in EPF through i-Saraan. This provides an opportunity for those who are self-employed or don’t earn a regular income to make voluntary contributions to their EPF accounts and access exclusive government incentives for retirement planning.

Here’s why you should consider increasing your savings with i-Saraan: 


1. Flexible contribution

You have the flexibility to contribute to your EPF account at any time and with any amount, subject to a maximum of RM100,000 per year. This ensures that saving for retirement doesn’t strain your immediate cash flow, allowing you to manage your finances effectively.

 

2. Annual dividends 

The EPF’s annual dividends significantly contribute to the growth of your retirement savings. These dividends have the potential to outperform typical returns from standard savings accounts or fixed deposits, effectively safeguarding your savings against inflation and ensuring their steady growth over time.

 

3. Government incentives 

When you contribute via i-Saraan, you become eligible for a 15% government contribution on top of your contributions, up to a maximum of RM300 annually in 2024, subject to government terms and conditions. This incentive serves as an additional boost to your retirement savings, enhancing the overall growth of your EPF account.  

 

4. Tax relief 

Contributions toward your retirement savings may provide you with tax relief (subject to IRBM’s terms and conditions). This tax benefit serves as an added incentive, encouraging and rewarding proactive participation in building your retirement savings.  

 

5. Death assistance 

The EPF extends a RM2,500 death assistance to the nominee or beneficiaries of a member in the event of the member’s passing, subject to EPF terms and conditions. This invaluable benefit offers financial support and a sense of security to your loved ones in challenging times.   

 

Contributing to your EPF account is the most straightforward approach to prepare for retirement, so don’t put it off for later.Get A Start On Building Your Retirement Fund With i-Saraan


The gig economy has undeniably revolutionised the modern work landscape and is here to stay. As you carve your path as a gig-worker, prioritising early retirement savings ensures a stable financial future, providing you with the confidence and peace of mind to navigate the ever-evolving gig landscape.

If you feel tired of being trapped in a fixed routine or if the idea of being stuck as a corporate slave for the rest of your life overwhelms you, perhaps it’s worth giving it a shot at freelancing. You never know, it could be the fresh start you’ve been looking for.