One of the major obstacles to freelancing or joining what’s known as the ‘gig economy’ largely centers on unpredictability. Whether we’re discussing basic income, financial planning or pension contributions, many of the things a permanent employee might take for granted are no longer guaranteed in the world of freelance work.
The positives are numerous – greater freedom over your schedule, the direction of your career, and full ownership of your business. Therefore, it’s no surprise that the absence of financial guidance and support for freelancers is rapidly being served by new platforms and services.
Mind the Gaps
Budgeting is a learned behavior for many, freelancers included. However, it’s also a case of visibility as much as control. The ability to provide account-linking, API-based budgeting applications, combining diffuse bank accounts into a single portal have become major benefits and hugely accessible services. Emma, Cleo, and Yolt make up some of the most recognizable; however, some of the major digital banks like Starling and Monzo have also made a point of including push notifications and spending limits to their accounts, which can encourage better financial habits for those who need to control their income and, more importantly, may not know when the next paycheck is coming.
Recent reports, including one from the IFA Promotion, have revealed a shocking savings gap in the UK, This figure is almost £40bn more than the £27bn savings gap often mentioned in discussions about the adequate base of wealth needed for pension provision.
The gap affects the financial security of almost 65% of the population, approximately 29 million adults, if no action is taken to close it – and the introduction of better budgeting applications could do a lot to combat that.
New services like Pensionbee have done something similar in the pension space, allowing for pooling of numerous pension pots, with access via a mobile application. In a space like the gig economy, where pension deposits can be hard to keep consistent, this could be a real game-changer.
Beyond the Basics
One of the more complex areas of financial life is largely associated with homeownership and mortgaging. While the self-employed are more than capable of earning enough to take out mortgages, it could once be considered difficult to secure a policy that was truly suitable. Beyond that, those who took out a mortgage while in full-time employment who are now looking to remortgage while freelancing may face further difficulties. However, nowadays freelancers can take advantage of mortgage adviser platforms when it comes to remortgaging, with sites such as Trussle making that access point to trustworthy mortgage comparison far more intuitive and transparent. This, in turn, makes the prospect of freelancing increasingly more attractive.
The likelihood in the next ten years could be a significant reduction in those choosing the permanent, but more restrictive forms of employment. The financial gaps that have been identified are not likely to close in a decade – there is a lot more to be done. However, the behavioral side of good financial habits is teachable, and also often simply a case of knowing where to go.
As with many things, the convenience factor can have a real democratizing effect on financial freedom, allowing more people to take their careers into their own hands without sacrificing the ability to plan for their futures with confidence.