Be a freelance super hero

The life of a freelancer is often perceived as one of luxury and leisure — fat day rates, minimal commitments, and lots of time spent working from sunny cafes. And while these stereotypes may ring partially true, there’s a dark side to the freelance lifestyle, especially when it comes to planning for one’s financial future.

Freelance Pros:

  • Freedom
  • Power to say “no”
  • Work with lots of different agencies and interesting people
  • Learn a ton working across a multitude of brands

Freelance Cons:

  • Rarely get to see your ideas through to final execution
  • Constantly earning trust and proving your worth
  • No regular pay-check
  • No super

It’s that last thing I want to delve into here: Superannuation.

Yep, I know, snore. Just about anything is more interesting. But almost nothing is more important to setting you up for comfort in your golden years. And while the focus of this short article is geared towards freelancers in creative industries, most of the info will be applicable to anyone, anywhere in Australia who works as a contractor.

So, as much as I know you’d rather be slagging off work in the comments section of Campaign Brief, I encourage you to take 3 minutes and read on. It could literally change your life.

According to the ATO, if you’re a freelancer nearly every agency you work for should be paying into your super, but industry norms mean they almost never do.

Here’s three things you can try and do:

  • When negotiating your day rate, ask for super on top.
  • That won’t always work, but you should still ask for a contract and make sure it indicates clearly whether your rate is inclusive or exclusive of super.
  • Ask if they will pay directly into your super fund, (legally, and technically they should). If they insist on paying you directly, don’t make a big deal, just make sure you actually put that 9.5% into your super before the end of the financial year.

And here’s three things you should definitely do:

  • Combine all your super accounts — stop paying multiple fees and insurances. If you’re not sure how to do this, the ATO can help.
  • Set up a savings account and park 10% of everything you make into it. Then roll it all into your super at the EOFY. By the way you may want to consider setting aside savings for taxes (~25%) and maybe even a 15% cash buffer in case of a dry spell. Hey, they can happen to anyone.
  • Top up your super to the maximum level you can afford. Most of us contribute too little to our super and as a result most of us won’t have enough when we’re older.

If you’re in a rush, you can stop reading now. Just make note of those last three things, and actually do them, and you’ll be way ahead in long run.

If you’re still with me, remember that creative industries, like advertising, for example, have a high burnout rate. When you factor in the fact that most people leave by 40, the need to park more money now for your retirement becomes even more important.

This is especially true when you consider that your super essentially forms your income for approximately ⅓ of your life. So unless your t-shirt company blows up, your Lotto numbers are a sure thing, or you’re marrying into royalty, you may want to pay a little more attention to it.

To make it easier for you, I’m going to break down the 5 myths of superannuation. I know how exciting it is for you. Try not to freak out.

The Five Myths about Super

  1. Super only matters when you’re old. Nope. The time to sort your your super is now. Thanks to the magic of compounding returns, the more you put in when you’re young, the more money you’ll have when you’re all grown up.
  2. The money just sits in a bank account until you’re 65. Wrong. While you’re busy working on gold winning ideas, your money is being invested in all sorts of things — some of which you may not like i.e. weapons, coal, tobacco. If you don’t know what your super is doing, consider switching to a fund that makes it clear.
  3. You have to use the default super fund your employer uses or recommends. Incorrect. You can choose any superannuation fund you want and thanks to the marvels of modern technology you can change anytime, easily. When new superannuation startup, Zuper, launches in August you’ll be able to do this on your phone in about 30 seconds. No paperwork necessary.
  4. Fund Managers have all the say about where your money is invested. No way José. With Zuper you can choose to invest your superannuation in the things that matter to you most — and cut Fund Managers, and their fees, out of the mix.
  5. It will be enough money to retire on. Sadly, no. Most people don’t/won’t have enough money in their super. In fact the average Australian will have a shortfall of ~$270k. Zuper’s Top-Ups and other tools will help you fill in the gap as painlessly as possible. According to the ABC, Around 86 percent of all new jobs created in Australia over the past year were part-time. In Ad Land those roles would’ve been filled by freelancers, typically working without a contract or any clear agreement in place regarding their super.

This is bad for the industry, and the future economy. Now more than ever, creative agencies need to step up and start paying super to their freelancers. And freelancers need to start taking more responsibility for their own financial futures.

Here at Zuper, we’ll make it easy for you to take back control over your super with the technology and transparency you’d expect from a new super company built for today.

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Eran Thomson

Founder and CCO at Zuper Superannuation. I've beaten cancer, been beaten by Mt. Everest, and like to bust rhymes to the beat.

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