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Freelancing is becoming more and more popular as younger generations take the plunge into self-employment. Millennials and Gen Zs care about having a flexible and well-balanced lifestyle more than any previous generations who have joined the workforce. Advances in technology also make remote working more feasible and comfortable. In 2019, 57 million Americans freelanced, representing 35% of the US workforce. The stats are even higher among those aged 18–24: 47% of the population freelance in some form or another, part-time or full-time.
It's no wonder why so many people seek out the independence of freelancing. The vast majority of freelancers (91%) say, "the best days are ahead." Advances in technology and changing attitudes about outsourcing to specialists open up new modes of work for many industries.
Freelancers are motivated by freedom and flexibility, according to a study by Upwork, including:
1) Be their own boss
2) Have work schedule flexibility
3) Have work location flexibility
Being self-employed, freelancers are in charge of everything for their business. This is both a benefit—freedom to make your own choices—and a challenge—being required to figure out all aspects of business management. The most difficult of these tend to be related to finances.
Tax payments are notoriously troublesome. Corporate employees have the luxury of their employer setting aside the needed taxes ahead of time. Freelancers require the discipline and foresight to do this themselves. Since it is difficult to estimate what to pay for tax accurately, freelancers often put more money aside than they need to for avoiding penalties from the IRS.
Expense management can be cumbersome. Most freelancers use their personal accounts for all of their purchases, and their business expenses are all wound up in their personal lives. If they track their spending well, freelancers can deduct much more business expenses for a wide variety of purchases. For example, a yoga instructor can write off her Spotify subscription, which she often uses in her yoga classes.
Unpredictable income makes planning a challenge. Like a trained business owner would, freelancers can use tools to see financial trends based on their income and client history. This frees them up to make wise and creative decisions for the future of their work.
Landing clients - Figuring out what to charge clients can be very tricky. The process benefits from proper market research and filtering that information with business expertise. Many freelancers rely on a social network of workers in their field. But this "evidence" for market trends is very haphazard and anecdotal. Advanced market tools and analysis can maximize a freelancer's time and skill set.
Managing clients - Having landed clients at the best possible rates, it's now time to keep up with all the money they owe you! Corporations have full-time accountants to send invoices and track down payments. Freelancers benefit immensely from having a workable invoicing system in place.
Retirement savings - Freelancers may not prioritize saving for retirement because the need seems distant and saving seems like a luxury. Corporate employees usually receive 401(k) funds from their company, but freelancers need to take on this responsibility themselves.
Health insurance - Spending time getting signed up for health insurance is viewed as a distraction and a hassle. In the ever-more-complex insurance market, freelancers benefit from professional guidance.
Lunafi aims to provide solutions to some of these challenges. We provide financial management software specially tailored to freelancers, with automated deductions, savings, and more.
By streamlining financial management, Lunafi helps freelancers excel in their work and enables them to keep their freedom long-term. Freelancers, let us help you continue doing what you love to do.
Learn more at https://www.lunafi.co/
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