A new study of freelancers has found that self-employed workers are mostly financially secure and happy in the present but are concerned about the future.
The report, The Path to Prosperity, has been produced by IPSE and Sherpa. The findings show that although 72% of freelancers are currently enjoying life because of how they are managing their money, 77% are concerned that the money they have - or are going to save - will not last.
These fears, says the report, are exacerbated by the lack of tailored money management advice and flexible savings products for the self-employed. Short-termism is particularly common among freelancers in their twenties and thirties; older workers are more likely to prioritise saving for retirement.
Suneeta Johal, IPSE head of research, education and training, said: "What you have at the moment is a situation where the self-employed are almost the YOLO [You Only Live Once] workers of the modern economy: secure and happy for today, but worried about tomorrow. So, while this report confirms that being your own boss can be extremely rewarding, it also raises concerns."
The report has identified the factors that most define financial wellbeing for the self-employed. It found they are: the freedom to make choices and enjoy life, earning enough to provide for family and loved ones, and being able to put money away for retirement.
The report has made the following recommendations:
- Put protections in place: Building stronger business networks and a more regular stream of clients, budgeting and getting the right insurances can help alleviate financial concern.
- Improve earning potential: Upskilling and training allows people to expand their skills and improve confidence, giving them a way to develop their careers and maximise earnings.
- Increasing understanding: Financial policies and services should be made available which understand the challenges of self-employment and offer adaptable solutions.
Patrick Muir, chief marketing officer at Sherpa, said: "This report is a major step forward in our understanding of the financial wellbeing of the self-employed … For the moment, most self-employed people are clearly enjoying the advantages of being their own boss. But their worries about the future show that there are problems here. This report's detailed and considered recommendations should help policy-makers and industry leaders alike alleviate these problems and improve things for this vital and growing sector."
Iona Bain, founder of the Young Money Blog and IPSE's 2018 Freelancer of the Year, added: "We must give millennials more empowering choice about how they manage their long-term finances, rather than keep them tethered to old-fashioned products and attitudes. Self-employed people often have different financial goals and strategies to employees - all of which are misunderstood by policy-makers. This research shows just how much we value our freedom, and why measures to ensure that freedom is protected are vital."