“In my day,” began my grandmother for the umpteenth time over the Christmas dinner table, “we didn’t wander around with our noses stuck to our phones. We went out and we noticed the world.” Ah, yes indeed – the age-old ‘things have changed’ conversation.
Ironically, it’s perhaps one of the few things to have remained the same since grandma’s generation had “their day” all those decades ago.
You have to wonder what they were noticing as they wandered the world, noses defiantly raised from palm level. The changes must be too many to number, but sure – grandma’s right to begin with the mobile phone, which would inevitably lead her to the internet, to micro computing, to computing in general and onwards.
She’d end up being led all over the place. She’d have little time to do anything else other than count the changes she’d witnessed.
One thing that would probably escape grandma’s attention, however, is a seismic change in how we work. “In your day,” you could point out, “you got a job for life. You learnt a trade and you stuck with it until retirement loomed.” And if she wondered aloud how, precisely, things had changed, you could start reeling off facts and figures.
“65% of 18-24 year olds say that freelancing is part of their longterm plan”, you could tell her, quoting a recent PeoplePerHour.com survey. “1.56 million people in the UK freelance full time, while 225,000 freelance as a second job.” If grandma wonders why that is, well, you could point to a number of reasons.
Two years ago I spent some time working with two young millennial entrepreneurs, Olivia Cappuccini (founder and CEO of Scenes of Reason) and Max Mallows (co-founder of 1Roof.com). At the time both of them were in their mid-20s, and yet neither had known anything other than entrepreneurship.
“When we left university, there simply weren’t any jobs,” they explained. “The easiest path was to create something for ourselves, putting our destiny into our own hands.” Both of their companies remain in business. The idea of going and working for someone else will never be an appealing option.
As Max and Olivia suggest, there’s no question that the World Financial Crisis had an effect, but if grandma tries to tell you that the effect was entirely negative then, clearly, she’s wrong. “The GFC may have caused a shift in the way we perceive work,” explains business owner Christine Khor. “As people started to realize that mass redundancies were a very real threat and that working for one employer did not necessarily equate to job stability, they started a revolution of self-actualisation.”
What is a portfolio career?
‘Self-actualisation’ may sound suspiciously like new-age mumbo jumbo, but – along with the sense of being in control that comes with working on your own terms – it’s a large part of what is fuelling the rise of the portfolio career.
If grandma looks at you dumbfounded and demands an explanation, ‘portfolio careers’ are the exact opposite of the ‘job for life’. People who follow this path tend to be specialists in a number of things, sometimes related, that allow them to keep all of their eggs out of a single, increasingly unstable basket.
For example, a freelance journalist might also be an exceptional photographer and a decent web designer, and is able to activate each of these specialist strands whenever necessary. Grandma might dismiss it as hedging one’s bets, to which you might reply that aligning yourself with a single discipline in a world that is diversifying faster than ever makes no sense at all.
Grandma might also complain that anyone with a portfolio career is having their cake and eating it, and she’d most likely be correct, although she’d largely be saying it out of jealousy. While there’s obvious stability in having multiple strings to your bow, there’s also that well-documented spice that variety adds to one’s life (grandma does love a good cliche, after all).
We’re talking here about the aforementioned ‘self-actualisation’ – the ability to look at what you’re good at and what you enjoy doing and weave them into that ever-important work/life balance. According to Charlie Ball, deputy director of research at careers website Prospects, “In 2013, only 20% of those with portfolio careers were doing so because they needed to take more than one job to make a living.”
As an example, you might remind grandma of the aforementioned freelance journalist. He may not be able to make a full-time wage taking photos, but by combining it with his other skills he can integrate photography in a way that contributes to his overall financial picture.
Above all else, it’s contributing to an overall sense of fulfilment – as important to many these days as a bulging bank account once was. As grandma’s questions show, it’s simply a case of changing your mindset.
Our parents brought us up to believe that job security is the be all and end all, but the world has changed since they entered the workforce. Nurturing a single skill set may no longer be the safest way forward.
Does a portfolio career suit everyone?
“So how do I go about getting a portfolio career going?” wonders grandma, trying hard not to sound too interested, but clearly wondering how she can turn her cake and bridge parties into something lucrative. “What do I need?”
There are no specific tools you can suggest she goes out to buy. Rather, there are a few rules that she might want to live by. In an interview with Forbes, the designer, musician, lecturer and consultant, Fred Deakin, offered eight very useful pointers, each of which can act as part of a checklist, determining whether a portfolio career is for you:
- “Fly lots of missions” – Take the time to try a few things out thoroughly before settling on one specialism.
- “Don’t be afraid to change direction” – Even if you’ve had success in one area, it doesn’t mean it’ll last forever. Spot the signs and move on.
- “Collaborate” – Only by exposing yourself to different skills and disciplines will you know whether or not you can learn and incorporate them into your portfolio.
- “Diversify” – After all, what good is a portfolio career without an element of variety?
- “Grab unexpected opportunities” – Don’t be the person wondering ‘what if?’
- “Don’t always chase the money” – Having a portfolio career is as much about that sense of fulfilment as it is about filling your bank account.
- “Learn to say no” – Good advice for all freelancers. By saying ‘yes’ to everything, you end up belonging to everyone other than yourself.
- “Choose projects that scare you as well as excite you” – “If you’re not scared, you’re in your comfort zone, but if you’re not excited, this is something you don’t want to do. If you don’t feel both excited and scared, you’re just going through the motions.”
Your portfolio career, your tax and your pension
Before you (or your grandma) embarks on a portfolio career, it’s worth knowing how things might sit with your tax and pension schemes. To make sure you’re onside with HMRC, I asked Kenny Fitzgerald of My Accountant Friend about the ins and outs of running a portfolio career through an existing limited company.
“As you might imagine, there’s no one-size-fits-all answer to this question,” explains Kenny. “Technically, they could all go through the one company, but it wouldn’t be recommended as each activity would have to be separated out with the tax comps anyway, and it can all become a bit of a mess.
My advice would be to put each separate activity through a different company, or perhaps operate as self employed (a sole trader) for some, depending on the plans for the activity. Some work you do may also end up being on a PAYE system, which would make the formation of a company unnecessary. As always, it’s best to talk to a knowledgeable accountant before you take the next step.”
Jade Wimbledon works for pension company PensionBee and, as a freelancer herself, understands how important it is for people with unconventional working patterns to consider retirement saving. “If you’re employed full-time at one company,” she explains, “generally your employer will automatically enrol you into a workplace pension scheme, and make employer contributions into your pension.
This means that you don’t really have to think about it. But if you work in a different way, then it’s usually up to you to set up a pension.
“Pensions have lots of benefits – including generous tax relief from the government – but only around 18% of UK freelancers are paying into a pension, compared to 48% of employees. This means that many self-employed workers may struggle to make ends meet when they reach retirement. Could you could live off £155 a week? That’s currently the maximum state pension.”
“The traditional pension industry behaves as if we have one ‘job for life’, which just doesn’t reflect how many people work today. But having a portfolio career is by no means incompatible with having a comfortable retirement. You can set up a personal pension and take control of your retirement saving. PensionBee can help you do this, by combining your old pensions into a flexible, online personal pension.”
“If you can’t pay much money into your pension at the beginning, or if your income varies a lot from one month to the next, it’s not a problem: you can choose to make one-off payments into your pension depending on how much you can afford.
You can add more money to your pension when you receive payment from a client, for example. Remember that one of the huge benefits of a pension is tax relief, so when you pay into a pension, the government effectively adds a contribution too. If you’re a basic rate taxpayer, the government adds £25 for every £100 you contribute.”
Not that grandma will need to be paying into a pension, of course, but she’ll worry unnecessarily if she thinks you’re not. Good luck with your portfolio career, and if grandma has any more questions, send her in our direction.
