38% of U.S. Workers Performed Freelance Work in 2023. Should You Join Them and Give Freelancing a Try, Too?

Many workers seek ways to make a living while maintaining flexible schedules. That isn't always possible when working a traditional job. Freelance work is one solution that has become more popular over the years.

A recent study by Upwork, a freelancing platform, found that 64 million Americans performed freelance work last year. Read on for a few notable stats from this study and to see whether it may be worthwhile to try freelancing.

An additional 4 million U.S. professionals freelanced in 2023

Upwork is a freelancing platform that connects independent contractors and clients. The company conducted its Freelance Forward 2023 study to examine the current state of freelancing in the U.S. Freelancing continues to be a significant part of the U.S. labor market and economy. In 2023, freelance workers contributed $1.27 trillion to the U.S. economy.

In 2023, 64 million Americans did freelance work. That's up 4 million from 60 million in 2022. Based on the results of the 2023 study, 38% of the U.S. workforce freelanced last year.

What generation of workers are more likely to freelance? Here's a breakdown of the stats:

• 45% of freelancers are millennials
• 27% of freelancers are Gen X
• 15% of freelancers are Gen Z
• 9% of freelancers are baby boomers
• 4% of freelancers are the Silent Generation

When looking at the entire U.S. workforce, Gen Z and millennials are more likely to freelance. 52% of all Gen Z workers performed freelance work in 2023, while 44% of millennials freelanced in 2023.

Regardless of their generation, most freelancers feel optimistic about the future of freelancing -- 85% of study participants said the best days are ahead for freelancing. This stat paints a positive picture overall of the future of freelance work.

Should you give freelancing a try?

The freelancing lifestyle works for many people. It's important to remember that there are no guarantees regarding work opportunities and income potential. You'll need to put in a lot of work as a freelancer, and unlike a traditional job, you likely won't earn consistent pay.

However, many workers prefer this type of work solution because they have more flexibility over their schedules, the work and projects they take on, and their income. Setting your own business and income goals can be empowering -- especially if you have lofty financial goals.

Whether you're considering doing freelance work while continuing to work full-time to boost your income or want to switch to a fully freelance work setup, you'll want to consider how your finances will change before you dive into the freelance lifestyle.

Three financial considerations to make as a freelancer

Want to prepare financially before becoming a freelancer? Here are some costs to consider.

1. Emergency savings

It can take time to build a successful freelance business. Building a solid emergency fund before you move to freelance work is wise. Having extra money set aside in a high-yield savings account is a great way to protect yourself financially so you can continue to pay your bills while you grow your business.

2. Taxes

Your tax situation will be different as a freelancer. As a self-employed worker, you're responsible for paying your taxes directly. Unlike a full-time employer, your clients won't deduct taxes from your pay. The IRS requires workers to pay taxes as they earn money.

Because of this, you'll want to make quarterly estimated tax payments throughout the year. Doing this can allow you to avoid penalties. Ensure you know how your taxes will change when you shift to freelance work. If you need guidance, contact an accountant.

3. The cost of benefits

You should also consider how you will fund benefits that are typically provided to employees. For example, if you previously worked for a traditional employer, you may have had health insurance coverage provided at an affordable price. As a self-employed worker, you should prepare for how you will fund any previously provided benefits like this.

Freelancing could be a good move

Freelancing isn't for everyone, but it's a career move that could improve your life. But ensure you take the proper financial steps before transitioning into this work.

Are you looking to start your own small business in 2024? Check out our small business resources to learn about the tools that can help you as a business owner.