The Path to Prosperity report found that poor financial wellbeing is a major concern for the self-employed. While 72% said that they are enjoying life at the moment because of how they are managing their money, 77% were concerned that the money they have, or are going to save, will not last.
More than a third (36%) reported that they do not feel secure in their financial future. Millennials were found to be particularly worried; with 80% of this group saying that they are concerned their money will not last.
Concerns over money were found to affect the performance of self-employed people. Half (51%) said they felt anxious or stressed about finances, 34% said it caused them to lose sleep, and 33% said it meant they lacked confidence.
As well as shorter-term physiological and physical effects, many felt self-employment was not sustainable. Forty-five per cent had considered giving up self-employment, and 44% said they had taken up work they wouldn’t normally consider to make ends meet.
IPSE said that irregular income and earnings were the main barriers for the self-employed in getting on top of their finances (51%).
Close to one in five (17%) of those surveyed felt that developing their skillset would would help to improve their financial wellbeing, through allowing them to develop their careers and earning potential.
Recent separate research from IPSE adds to this picture of high levels of financial instability, finding that 43% of freelancers have done work they were not paid for, a figure that rises to 58% among 18- to 24-year-olds.
Inna Yordanova, a research officer at IPSE, told HR magazine that while policymakers are responsible for providing more regulation around independent workers, HR can also play an important role by making sure that freelancers are paid on time and showing that they are valued members of the workforce.
"The single most important thing companies and HR teams can do to value freelancers and the self-employed is to promote a responsible payment culture and avoid late payment," she said.
Education on pensions for the self-employed is also vital to ensuring a strong relationship between employers and this increasingly important, and growing, part of the UK workforce, Yordavona added. “HR professionals and companies that engage freelancers play an important role in providing accurate and timely information, particularly on pension options. There are 3.3 million freelancers in the UK who are sleepwalking their way to pension poverty," she said.
“Even though engagers and HR directors don’t owe freelancers obligations to pay pension contributions, they can promote awareness among freelancers of the available options. This can be especially important as freelancers don’t automatically have access to HR advice and support.
“HR can also help advocate for more flexible pensions products from financial suppliers. These products would suit both employees and freelancers.”
Yordanova added that young self-employed people are particularly at risk because of a lack of financial education.
“Our research found that the lack of financial security was tied into low self-confidence in young people. This could be because they have not been taught how to promote themselves, how to bargain, and how to market themselves and their businesses. A lot of training concentrates on skills the self-employed might already have, but there’s not enough on developing these skills further,” she said.
The IPSE research was based on a survey of 1,066 self-employed people who had been working freelance for an average of nine years.