This freelancer’s most costly mistake became the impetus for her award-winning business
Katherine Steiner-Dicks speaks with Sophia Lan, former freelancer, financial coach and startup founder, to learn how one of her biggest mistakes ended up as the inspiration behind her award-winning business. Now she’s helping freelancers and others build secure strong financial futures
Let’s start at the beginning…
“After being scammed…and losing $5000 in an investment in the stock market, I didn’t want to look at investments ever again,” says Sophia Lan, founder of the WInvest Collective, a financial education site that is developing an AI-powered wealth management app called Money Bestie for the everyday person.
“There was a time when I truly feared managing my money,” says Sophia. However, after experiencing financial insecurity firsthand she decided to stomp out those fears. She obtained a finance degree and later became an investor and business owner. During this journey she says, “I encountered many women who experienced similar issues as me. Hence the birth of WInvest.”
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Sophia, a former freelancer, was crowned the winner out of 800 female applicants who entered the ‘Female Founders’ competition run by not-for-profit business incubator, Virgin StartUp and freelance platform, Fiverr.
Each finalist was given £3,000 in Fiverr credits to help develop their business ideas and paired with a top female business mentor for six weeks. However, as the winner Sophia was awarded £15,000 in Fiverr credits, of which she has been allocating funds towards hiring freelance app developers and UX designers. She also was coached by Raissa de Haas, co-founder of Double Dutch, an online cocktail business which Raissa set-up when she graduated university and went on to raise more than £4million. With support from Raissa to prepare her scale-up plans, Sophia then pitched her business to Holly Branson, Virgin Group’s Chief Purpose Officer and Gali Arnon, Chief Business Officer at Fiverr at the competition.
Financial coaching
WInvest aims to empower individuals, particularly women, through one-on-one financial planning and financial product education sessions. Being a former freelancer and small business owner, Sophia knows all too well that freelancers often face unique financial hurdles. One challenge is the constant pressure to work.
She explains by example with one of her case studies, “One of my clients who is a freelancer felt like he constantly had to work. “It was difficult for him to kind of relax because he felt like, you know, there’s not really a cushion for him to kind of sit back on.”
This feeling of insecurity can be compounded by the inherent uncertainty of freelance work. “When you’re doing freelancing, there’s a lot of uncertainty with work and…financial stress…getting clients…there are a lot of things going on.”
Another common challenge is the difficulty of consistently saving. As Sophia points out, “The main challenge freelancers have is committing to monthly [pension/savings/investment] contributions given how difficult that can be without a regular income.”
Financial planning for freelancers
Despite these challenges, scheduling in financial planning or just getting started is crucial for freelancers. Sophia Lan emphasises this point, “It is still important to create some assets such as an emergency fund. So, when you’re in a down time, you have the emergency fund, and when you’re doing good, you can contribute more to that.”
Building a pension is also key, she says. “Because the money will be there nevertheless, right? You can’t take it out until you retire. So why not put [your money] into somewhere that actually has growth.”
Consistency is key, no matter how small the amount. “The most important thing is to start and to do it on a regular basis, no matter if that is monthly or quarterly.”
Services like Winvest can simplify the process. Many people can get overwhelmed at the prospect of investing without a workplace pension, setting up a SIPP or knowing even where to start to combine multiple workplace pensions, which can be common among umbrella company and temp workers.
Sophia as a financial coach will help you step-by-step through the process of getting to know what you have coming in and out every month. She helps you become goal-oriented when it comes to finding the amount you need to save for an emergency fund. However, she says an emergency fund can mean different things to different people. For example, it could be used for sick days, a financial buffer between assignments or to go towards time off for a holiday.
“We help you to compare and select options, and then we help you to take the actions together if you want the support,” she says.
The business can also help you know how and where to consolidate pensions. She says, “What we can do is show you how to combine and move [your pensions], and then, once you succeed with the transfer, you can connect all of your accounts to get an overview of how your pension is performing from that point onward.”
Furthermore, the startup offers educational resources: “We do have workshops to build your knowledge base, where [for example] you understand how your pension is being invested right now. What are some of the other pension fund options out there, etc.”
Specific steps to overcome financial insecurity
Sophia outlines a clear path for freelancers:
Consolidate your pensions: Combine workplace pensions into a Self-Invested Personal Pension (SIPP). “You can see how that will compound even just on a yearly basis of 8% in 10 years’ time, that could double or even triple the money that you contribute…and you leave it just there.”
Establish an emergency fund: Calculate 4-6 months of living expenses in a high-interest savings account. Lan recommends separate savings pots for emergencies and discretionary spending. This “gives [you] a kind of simplicity of how [you’re] doing in general.”
Start investing: Even small contributions matter. “You could start today with five pounds, and this is going to help you in the long run,” she says.
While not a financial adviser, Sophia acts as a financial advocate, providing unbiased options. Users can schedule one-on-one calls for support with actions like setting up a SIPP.
WInvest is available to UK residents for £9.99 per month, offering workshops, personalised to-do lists, and access to financial coaches. They will keep you accountable for your financial goals and help you get back on track when life and work have other plans.
Extra Tips for Freelancers
- Automate savings (pay yourself first to make yourself rich before others)
- “Drip-feed” spending by having to transfer money from savings to your current account before a non-essential purchase- this will give you some thinking space before splurging.
- Regularly review expenses
- Discuss finances with friends and family
