As more and more people begin to see the benefits of independent earning, it’s becoming all the more important for people to ensure they are applying their skills and earning in areas that will reap the largest return
Freelancers, contractors, sole traders, the self-employed - four different terms to describe exactly the same thing: people earning income outside of a traditional permanent job structure. It used to be the case that you were ‘either or’: you were either a permanent employee, or you earned income independently.
Nowadays, people are earning income concurrently across multiple different sources, both permanent and independent. The lines between what is permanent and freelance are blurring, and that means we need to evolve not only the way we think about work, but also the way we manage our work.
Portfolioism is the Future
In February this year, April Rinne wrote a fantastic article for Quartz, in which she described the career of the future being more like a portfolio than a set path. This idea of ‘portfolioism’ is becoming very commonplace in the world of independent earning. Rather than limiting yourself to one single source of income using one single skill, why not diversify your ‘earning portfolio’ across multiple sources of income and reduce the risk of putting all your eggs in one basket? This is already happening today: for instance, Project Managers that moonlight as Uber Drivers or Wedding Photographers at weekends.
Whether knowingly or not, a large number of us are creating a ‘portfolio’ of work and we’re investing in those areas that bring us the greatest returns in overall well-being. These ‘returns’ may not necessarily be limited to purely financial returns either. For a large number of people, the ‘returns’ from working can also be environmental or social. For example you might earn a modest income from an area that brings you great personal satisfaction and joy, but that perhaps does not bring significant financial returns.
Managing your Career Portfolio
As we all start to become more comfortable with this idea of having a portfolio, so must we all become comfortable with the idea of managing our portfolio. Some of us may already be subconsciously doing this. However, I believe that there is a real need for us all to become more conscious of – and make more measured decisions regarding – the future of our portfolios. You can protect yourself from potential loss of earnings by being more aware of where demands for certain skills are declining and reacting to the market early enough. In other words, if you notice your industry or skills are in decline then investing in alternative skillsets early is the best way to plan for your future)
The key factors to consider when creating and managing your portfolio are:
Portfolio Diversity Think about the different skills that are required across all of your income sources. Do you have the capacity and/or capability to be able to dedicate yourself to a widely diverse portfolio? It can be rewarding to have an extremely diverse portfolio but it can also force you to up-skill in many areas concurrently.
Portfolio Risk What is the Risk Profile of your Portfolio? Just as investing in more volatile stocks or financial products yields more risk, there will be income streams that come with higher risk associations. The extent to which you take advantage of some of the more high risk/high reward income streams will depend on your overall risk appetite. There may be a chance that the value of a skill you’ve learned suddenly goes down in value or demand. You don’t want to be stuck having dedicated all your time to a skill or industry where the demand suddenly declines due to environmental or technological changes. It’s also worth noting that your risk appetite may alter over time: perhaps early on in your career you opt for a more high-risk strategy but as time goes on you become more conservative – especially at times when volatility in your income would have more of an impact on you.
Portfolio Timeline & Goals Investments are all about looking to the future. Similarly for portfolioists, the decisions made on their earning portfolio will be driven by the timeframes they wish to invest over and the goals they are looking to achieve. Are you looking for ‘returns’ over the course of a year or even five? How about 10 years? Your timeframes will always dictate where and how you invest your time based on the potential rate of return. The ability to set clear goals for your portfolio early on – frequently re-assessing them – can help you to focus your efforts and invest in those areas that will help you achieve your goals.
Portfolio Metrics Ask any seasoned investor and they’ll tell you that one of the most important parts of managing a portfolio is being able to read the data. It’s important to know when to shift your focus into a particular part of your portfolio. Which jobs are paying the highest returns? Which areas are your skills in the highest demand? Successful portfolioists will adapt and prioritise the work that they do in order to capitalise in the areas where they can generate the highest returns.
Finding a Balance
As with any investment portfolio, your portfolio of work is all about finding a balance that works for you. You might be most comfortable at the conservative end of the spectrum, with a single earning source in an industry that is currently very stable. Conversely, you might be more comfortable at the opposite end of the scale, spreading your skillset across many higher-risk areas to increase your rate of return.