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‘YOLO’ workers: self-employed happy in present but not prepared for the future, report finds

Self-employed workers are mostly financially secure and happy in the present, but concerned about the future, a new report by IPSE and Sherpa has found. 

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The report, ‘The Path to Prosperity’, shows that although almost three quarters (72%) of freelancers are currently enjoying life because of how they are managing their money, 77 per cent are concerned the money they have – or are going to save – will not last.

It also found that over half (51%) of the self-employed have felt anxious or stressed about their financial situation. This is exacerbated by the lack of tailored money management advice and flexible savings products available for the self-employed.

According to the research, short-termism is particularly predominant among Millennials, who are more likely to focus on the financial near future. Generation X and Baby Boomers, on the other hand, are far more likely to prioritise saving for retirement.

To help improve the situation, the report 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.

To alleviate any longer-term concerns and provide the self-employed with the means to take control of their financial wellbeing, the report makes the following recommendations:

  • Put protections in place Irregularity of earnings is the main barrier preventing self-employed people from taking control of their financial situation. Building stronger business networks and a more regular stream of clients, budgeting and putting insurances in place can all help alleviate financial concern.   
  • Build up confidence to improve earning potential – Upskilling and training allows people to expand their skills and confidence, thus giving them a pathway to develop their careers and maximise earning potential. Millennials in particular would benefit from training providers who offer advice about money management, dealing with irregular work patterns and aligning their skills with the demands of running a business.
  • Increasing understanding and flexibility – Volatile government taxation and regulation, a lack of self-employed-specific advice and financial products that do not offer flexibility are barriers to effectively managing finances. Financial policies and services should be made available which understand the challenges of self-employment and offer adaptable solutions.

Suneeta Johal, IPSE Head of Research, Education and Training, commented: “What you have at the moment is a situation where the self-employed are almost the YOLO 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.

“Because of irregular work patterns, late payments and a lack of tailored products, self-employment can pose financial challenges and leave people concerned for the future. The crucial recommendations in this report can alleviate that and help the self-employed take control of their financial wellbeing.” 

Patrick Muir, Chief Marketing Officer at Sherpa, commented: “This report is a major step forward in our understanding of the financial wellbeing of the self-employed. The factors behind financial wellbeing and contentment are simply different for them to 9-5 employees, and policymakers and business leaders need to understand this.

“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 policymakers 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 policymakers. This research shows just how much we value our freedom, and why measures to ensure that freedom is protected are vital.”

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IPSE is the leading association for contractors, consultants, interims, freelancers and the self-employed. We strive to bring our members the most comprehensive and useful range of information and services and all the latest news about what affects your business.